TRC SYNERGY BERHAD (413192-D)

As one with the

TRC SYNERGY BERHAD NATION (413192-D) | ANNUAL REPORT 2017

Mata Air (2016) by Jalani Abu Hassan

TRC SYNERGY BERHAD (413192-D)

TRC Business Centre Jalan Andaman Utama 68000 Ampang, Selangor ANNUAL REPORT Tel: 603-4103 8000 Fax: 603-4108 7016 www.trc.com.my www.trc.com.my Our VISION

To become a large and diversified conglomerate with core business in construction, property development and privatization of government projects. As one with the nation

Inside this ANNUAL REPORT

002 Chairman’s Statement 005 Management Discussion and Analysis Disclosure 010 Sustainability Statement 014 Corporate Structure 015 Corporate Information 016 Profile of Directors 021 Profile of Senior Management 023 Corporate Governance Overview Statement 026 Statement on Risk Management and Internal Control 030 Audit Committee Report 033 Financial Statements 128 List of Properties 130 Analysis of Shareholdings 133 Notice of Twenty-First Annual General Meeting 137 Statement Accompanying Notice of Annual General Meeting Proxy Form Chairman’s Statement

DEAR ESTEEMED SHAREHOLDERS,

On behalf of the Board of Directors, I am honoured to present to you the Annual Report and Audited Financial Statement of TRC Synergy Berhad and the Group for the financial year ended 31 December 2017 (“FY2017”).

Tun Jeanne Binti Abdullah Chairman

OVERVIEW OF GROUP PERFORMANCE FOR FY 2017

In essence, the year 2017 has been a year full of excitement for the Group. It was a year where the Group had successfully clinched a few significant contracts in rail infrastructure development projects, among others. With that sizeable contract wins, the Group’s external construction unbilled order books stood at RM2.7 billion at the end of the year, not to forget the Group own inhouse construction order book for our to be launched Transit Oriented Development (“TOD”) project at Ara Damansara as well as our PPA1M and open market high rise housing development projects at Precinct 18 of Putrajaya. Our unbilled order books cover ratio of 3.7 times over FY2017’s revenue augurs well and it would keep the group busy over the next few years with earning visibility and sustainability assured.

Be that as it may, the Group has been and would continue to search for new tenders in projects that falls within our forte and internal financial benchmark to solidify the Group presence as a reputable Malaysian construction franchise in line with the Group’s aspiration to progress in tandem with the nation's vision.

In order to have a meaningful comparison to gauge how the group has fare financially in FY2017 vs FY2016, it is of paramount important we exclude the impact of unrealised profit or loss on foreign currency exchange as this exceptional item was caused by the movement of Ringgit against foreign currencies (where the Group inter-company advances are denominated) and it is unrealised, non-operational and non-cash item in nature.

2 TRC SYNERGY BERHAD Chairman’s Statement (cont’d)

Summary of financial FY2017 vs FY2016

In RM’mil In Sen Profit Profit Gross Operating Before Profit Attributable Profit / Profit / Taxation / After Tax / to Equity Earning Per Description Revenue Margin Margin Margin Margin Holders Share 78.6 / 46.9 / 53.2 / 36.1 / FY2017 - Core 728 36.5 7.59 sen 10.8% 6.4% 7.3% 5.0% Less: Unrealised Loss on Forex - - (6.27) (6.27) (6.27) (6.27) (1.3 sen) 78.5 / 40.6 / 46.9/ 29.8/ FY2017 - Reported 728 30.2 6.29 sen 10.8% 5.6% 6.4% 4.1%

56.0 / 24.5 / 27.7 / 22.9 / FY2016 - Core 754 22.9 4.76 sen 7.4% 3.3% 3.7% 3.0% Plus: Unrealised Gain on Forex - - 5.0 5.0 5.0 5.0 1.04 sen 56.0 / 29.5 / 32.7 / 27.9 / FY2016 - Reported 754 27.9 5.80 sen 7.4% 3.9% 4.3% 3.7%

% of Increase / (Decrease) 2.83 sen (3.4%) 40% 91% 92% 58% 59% in Core Numbers or 59%

Note: EPS is calculation is based on total issued and paid up shares of 480.497 million units

Financially, the Group has performed well as The very positive set of our financial numbers were attributed to the collective it had achieved gross profit of RM78.5 million, effort, hard work and dedication of all our human capital under the stewardship an increase of 40% year-on-year (“YOY”) with and guidance of our highly capable and experienced senior management gross profit margin surged to 10.8% from 7.4% team, resulted in better cost management, improved profit margin as well a year earlier. as higher contribution from our Australian property development and home builder business post gestation stage. On “core earning basis” (without the impact of unrealised forex as aforementioned), the As for the marginal dip (down by 3.4%) in our revenue for FY 2017, there Group’s: was no cause for alarm yet as the slightly lower revenue was attributable to the fact that a few of the Group’s sizeable projects were at the tail end of • operating profit rose 91% YOY to RM46.9 the progress billing cycle. Going forward, the Group’s revenue is expected to million with operating profit margin regain its upward trajectory as the few significant infrastructure contracts the enhanced to 6.4% from 3.3% a year ago; Group secured in FY 2016 and 2017, gradually progress into mature stage over the next 1 to 2 years. • profit before taxation climbed 92% YOY to RM53.2 million with PBT margin advanced to 7.3% from 3.7% recorded for previous year;

• profit after taxation touched the RM36.1 million mark, an increase of 58% YOY with corresponding improvement of PAT margin to 5.0% versus 3.0% in FY2016;

• Sequentially, our core earnings per share (“EPS”) too hit the height of 7.59 sen (FY2016:4.76 sen), a level we have not seen for the past many years.

ANNUAL REPORT 2017 3 Chairman’s Statement (cont’d)

DIVIDEND ACKNOWLEDGEMENT

The Board in recognizing the Group’s sustainable financial AND APPRECIATION performance, has recommended a first and final single tier On behalf of the Board, I would like to express my sincere dividend of 2.8 sen per share, for the FY2017 amounting to gratitude to my fellow Board of Directors, particularly to our RM13,453,919. This represents a net dividend pay-out ratio of highly respected Group Managing Director, who has been 37% of the realised net profit after tax achieved for FY2017, the key driving force behind the success of the Group, for his which is significantly above the minimum dividend policy of 25% invaluable wisdom and guidance in joining hands with the set by the Board. This proposal is subject to the shareholders’ board members in charting the strategic course to ensure the approval at the forthcoming Annual General Meeting of the Group continue to growing from strength to strength in this Company. highly competitive industry landscape.

My sincere appreciation to you, our shareholders, government authorities, clients, associates, financiers, fund managers, MOVING FORWARD analysts, business partners, consultants, members of media, sub-contractors, suppliers as well as other stakeholders for Though the Group is encouraged by the positive prospect of your strong support, trust and confidence in TRC Synergy construction industry ahead underpin by the continued public Berhad. Our Group values and look forward to your continued infrastructure projects to be rolled out soon i.e. East Coast support as we undertake new challenges and opportunities Rail Link, KL-Singapore High Speed Rail, Pan Borneo Highway ahead. Sabah, MRT circle line, Rapid Transit System link between Johor Bahru and Singapore, etc. where the Company would Last but not least, let me express my heartfelt gratitude to the certainly be one of the strong contenders for the medium to management team and all employees for their unparalleled big ticket order flow from this mega infrastructure wave, the hard work, dedication and commitment to achieving much Group however, reckons that 2018 will be another challenging better financial results, despite various difficulties and year in view of the increasingly tough operating environment challenges they had encountered during the year. for construction and infrastructure players, characterised by potential costs escalation, margin compression exacerbated by On that note, I conclude this financial year’s review and we look intense competition from not only local but the foreign players forward to 2018, to drive the Group to greater height. as well. Thank you.

Tun Jeanne Binti Abdullah Chairman

4 TRC SYNERGY BERHAD Management Discussion & Analysis Disclosure

OVERVIEW OF GROUP’s ANALYSIS OF BUSINESS OPERATIONS FINANCIAL RESULTS

TRC Synergy Berhad and its subsidiary companies (“the The Group achieved its highest ever core profit Group”) is an established organization with its core business before taxation as well as core net profit of is in construction and property development. From its modest beginning in 1984, the Group has over the years achieved RM53.2 million and RM36.1 million respectively a steady operational and financial growth, together with for FY2017, an increase of 92% and 58% year-on- consistent return to the shareholders. year (YOY).

With the recent successful completion of major infrastructural The core earnings and profits stated in the analysis of financial works around Klang Valley such as the MRT and LRT projects, results were derived after the exclusion of the impact from the Group has positioned itself as one of the preferred unrealised profit or loss on foreign currency exchange as contractor and thus pre-qualified to participate in future this exceptional item was caused by the movement of tenders in these area of works. Ringgit against other foreign currencies (where the Group inter-company advances are denominated) and it is unrealised, The Group’s construction division, Trans Resources Corporation non-operational and non-cash item in nature. Sdn Bhd (“TRC”) continues to perform as the main contributor to the Group’s earning. Presently, the division is all set to execute the MRT and LRT project packages that has been For FY2017, the Group has performed well as it had achieved secured in 2017. a gross profit of RM78.5 million (FY2016 : RM56.0 million), an increase of 40% year-on-year (“YOY”) with gross profit margin As for property development, the Group’s two main property surged to 10.8% from 7.4% a year earlier. The improved gross subsidiaries, TRC Land Sdn Bhd (“TRC Land”) and ADS Projek profit and margin were attributable to our very dedicated Sdn Bhd (“ADS”) spearhead it’s activities. project team collective effort in optimizing cost management in terms of supply chain, vendors and sub-contractor network, TRC Land main project is the development of Perumahan procurement strategies, stock management, manpower and Penjawat Awam 1 Malaysia (PPA1M) in Precint 18, Putrajaya. resources deployment, which had contributed to higher margin It is a joint venture project with Putrajaya Holdings. for our projects.

As for ADS, it’s main activity is the mixed development at Ara Year-On-Year, the Group core operating profit surged to Damansara LRT Station, a joint-venture development with RM46.9 million (FY2016 : RM24.5 million), an improvement Prasarana Malaysia. of 91% with the core operating profit margin enhanced to 6.4% (FY2016:3.3%). The significant rose in core operating profit were The Group continues to adopt innovative approach in it’s the results of the higher gross profit achieved, land disposal operations which combines up to date technologies and in Australia with a gain of approximately RM4.4 million, human resource capabilities in order to ensure the success of higher distribution of profit from partnership in Australia of it’s projects. This will further translates to better values to the RM3.5 million plus higher amount from the disposal of some shareholders and stakeholders in terms of expected return and old machineries and miscellaneous of approximately RM2.5 sustainable growth. million. This was partly off-set by allowance for doubtful debts of RM4.65 million, impairment of investment in associate company of approximately RM1.0 million.

Core profit before taxation wise, the Group posted RM53.2 million for FY2017 vs RM27.7 million in the previous corresponding year, up 92% YOY with the core PBT margin advanced to 7.3% (FY2016 : 3.7%). The robust core PBT and margin were contributed by the higher core operating profit generated, financing cost saving of RM0.5 million due to lower amount of borrowing following the near completion or completion of certain projects plus incremental contribution from the associate companies of RM2.5 million, especially from our Australia property development and home builder business.

ANNUAL REPORT 2017 5 Management Discussion & Analysis Disclosure (cont’d)

The Group’s core profit after tax hit the record high of RM36.1 million (FY2016 : 22.9 million), an enhancement of 58% only, with corresponding PAT margin improvement to 5.0% (FY2016:3.0%). The much higher core PAT was partially neutralised by the higher effective tax rate of 36.5% (FY2016 : 14.8%).

Sequentially, the Group core earnings per share (EPS) too touched the record level of 7.59 sen (FY2016 : 4.76 sen) thanks to an overall improvement in terms of better cost management, effective manpower recruitment and deployment, enhance operating efficiency and productivity and higher project margin achieved for FY2017.

With the above feel good factor, it is important for us to also touch on the marginal dip (down by 3.4%) in the revenue to RM728 million (FY2016 : RM754 million). Rest assure that there is no cause for alarm on the lower revenue generated by the Group for FY2017 as it was attributable to the fact that a few of the Group’s sizeable infrastructure projects were at the tail end of the progress billing cycle. Going forward, the Group’s revenue is expected to rise as the few significant infrastructure contracts secured in 2016 and 2017, gradually progress into mature stage of the “S” curve over the next 1 to 2 years.

FINANCIAL PERFORMANCE ANALYSIS FOR FY2017

FY2017 FY2016 Changes Description RM’mil RM’mil % Group Revenue 728 754 (3.4%) Gross Profit (GP) 78.5 56.0 40% GP Margin 10.8% 7.4% 3.4% Core Operating Profit (COP) 46.9 24.5 91% COP Margin 6.4% 3.3% 3.1% Operating Profit (OP) 40.6 29.5 38% OP Margin 5.6% 3.9% 1.7% Core Profit Before Taxation (CPBT) 53.2 27.7 92% CPBT Margin 7.3% 3.7% 3.6% Profit Before Taxation (PBT) 46.9 32.7 43% PBT Margin 6.4% 4.3% 2.1% Core Profit After Tax (CPAT) 36.1 22.9 58% CPAT Margin 5.0% 3.0% 2.0% Profit After Tax (PAT) 29.8 27.9 6.8% PAT Margin 4.1% 3.7% 0.4% Core Profit Attributable to Equity Holders 36.5 22.9 59% Profit Attributable to Equity Holders 30.2 27.9 8.2% No. of Shares Issued and Paid Up (Million Units) 480.497 480.497 - Core Earnings Per Shares (CEPS) - Basic 7.59 Sen 4.76 Sen 2.83 Sen Earnings Per Share - Basic 6.29 Sen 5.80 Sen 0.49 Sen Core Earnings Per Shares (CEPS) - Diluted 7.59 Sen 4.76 Sen 2.83 Sen Earnings Per Share - Diluted 6.29 Sen 5.80 Sen 0.49 Sen

Qualifying Notes: The above ‘core’ earnings and profits were derived by excluding the impact of unrealised profit/(loss) on foreign currency exchange with the quantum as detailed below:

Not Financial Year Ended 31 December 2017 RM’mil 2016 RM’mil Applicable

Adjustment made by (a) adding back unrealised loss for FY2017 and (b) minus- Not (5.00) 6.27 off unrealised profit for FY2016 from the respective reported financials. Applicable

6 TRC SYNERGY BERHAD Management Discussion & Analysis Disclosure (cont’d)

CONSOLIDATED FINANCIAL CONSOLIDATED CASH FLOW POSITION ANALYSIS FOR FY2017 ANALYSIS FOR FY2017 TOTAL ASSETS FY2017 At the end of the financial year, the Group has total assets of Description RM’mil RM816.9 million (FY 2016 : RM827.4 million), slightly down Net Cash Generated/(Used) in Operating by 1.1% YOY, attributable to lower current assets to RM651.7 30.2 million (FY2016 : RM662.0 million), dropped by 1.6% as the Activities results of reduction in property development costs by RM36 Net Cash Generated/(Used) in Investing million, primarily due to reclassification of completed unsold 34.3 apartments in Johor Bahru into inventories as well as some Activities other property development costs into property. The reduction Net Cash Generated/(Used) in Financing of RM13.0 million in other current assets was due to lower (88.7) Activities amount in certification for the work already done. Net Increase/(Decrease) in Cash & Cash (24.1) As for non-current assets, the main changes was the Equivalent at end of Year reclassification of our land in Richmond, Australia from properties held for development into property as the hotel, Total Cash & Cash Equivalent at beginning 79.9 Element Richmond Melbourne is currently under construction of Year and it is slated for completion by first quarter 2019. Total Cash & Cash Equivalent at end of Year 55.8 TOTAL LIABILITIES The Group’s cash & cash equivalent at the end of Year decreased Total liabilities of the Group correspondingly reduced in line by RM24 million to RM55.8 million (FY2016 : RM79.9 million) with the reduction in total assets. As at end of the financial year, the Group’s total liabilities stood at RM412 million was primarily due to the repayment of short term borrowing (FY2016 : RM442 million), shrank by 6.8% YOY, predicated by RM77 million as a result of settlement of project financing on the reduction in net borrowing by RM69 million, which is upon completion or nearing completion status plus the partially off-set by incremental of RM36 million in trade and incremental dividend payment of RM6.0 million in FY2017 for other payables plus higher taxation by RM4.8 million. 1.9 sen per share dividend declared for FY 2016 (FY2015 : 0.65 sen dividend per share). Be that as it may, the borrowings are CURRENT RATIO expected to rise along with the accelerative progress billings for our few significant projects over the next 1 to 2 years. The Group’s current ratio, a yardstick to gauge the state of financial liquidity, stood at 1.62 times (FY2016 :1.52 times), reflect the adequate level of liquidity to meet its short term financial obligations. CAPITAL MANAGEMENT OWNERS’ EQUITY FY2017 FY2016 Owners’ equity rose by 5.5% to RM401.5 million (RM380.5 Description RM’ mil RM’mil million) on the back of current year’s retained earnings. Cash & Bank Balances 220.4 233.8

FY2017 FY2016 Total Borrowings 102.6 171.5 Description RM’mil RM’mil Variance Net Cash Net Cash Non-Current Assets 166.2 165.3 0.5% Net Gearing Ratio Current Assets 651.7 662.0 (1.6%) 117.8 62.3 Total Assets 817.9 827.3 (1.1%) Non-Current The Group is in net cash position of RM117.6 million (FY2016 8.8 5.5 60.0% Liabilities : RM62.3 mil). The strong and healthy balance sheet would put the Group in good position to source for borrowings to Current Liabilities 403.0 436.3 (7.6%) part finance the projects at favourable terms while the Group Total Liabilities 411.8 441.8 (6.8%) would continue to be prudent in maintaining a sound financial Owner’s Equity 401.5 380.5 5.5% position that would facilitate the execution of strategic Total Equity 406.0 385.5 5.3% objectives via raising additional capital by enlarging its share Current Ratio 1.62 times 1.52 times 0.10 times capital base and/or gear up its balance sheet should there be Net Assets Per value accretive business opportunities come along over the Share Attributable 84 Sen 80 Sen 4 Sen coming years, be it for infrastructure construction or property to Equity Holder development in Malaysia and abroad.

ANNUAL REPORT 2017 7 Management Discussion & Analysis Disclosure (cont’d)

REVIEW OF GROUP RISK FACTORS

OPERATING ACTIVITIES There are several significant risks involved in doing the type of business that the Group is in. While these risks are identified, In 2016, the Group secured three (3) sizeable contracts from mitigation plan and actions are put in place to reduce and Mass Rapid Transit Corporation (MRT Corp) and Syarikat minimize these risks so that they would not affect the effort Prasarana Negara Berhad (Prasarana) for total value RM1.967 to gain maximum results and bring better values to the billion which is to date, the biggest value of total contracts shareholder and stakeholders: secured in a year. These contracts are for the construction of both MRT and LRT depots in Serdang and Johan Setia Competitive Industry and Situational Market Condition respectively, and the construction of 4.3 km MRT Guideway traversing the Sungai Besi area. The Group operates its business in a competitive market These newly secured jobs will keep the division busy for condition. This is very true especially for its construction the next four (4) years while at the same time will continue division where competition with other major contractors to actively participate in new suitable tenders to ensure within the same business segment is inevitable. Furthermore, continuous business sustainability. clients’ expectations in every aspect nowadays are higher. Other variables that contribute to the risks in this section are There are also the continued executions of the current fluctuations of Malaysian currency which would directly impact infrastructural works where these contracts are awarded material and machineries imports and also diesel price. in the year before, such as Pasar Seni Paid Link for MRT for the amount of RM103.8 million and the Pan Borneo Highway Therefore, the Group must employ competitive pricing strategy project in Sarawak for the amount of RM1.3 billion. coupled with sound technical proposal and other necessary approach during project bidding. Fortunately, competitive Meanwhile the property development division has started tender bidding is also made possible with the ready financing preliminary works for PPA1M in Putrajaya and the rest of major facilities, strategic alliances and availability of competent work is set to start in the first quarter of 2018. This division is personnel. Also, the Group will be more selective of any tenders also planning to start the construction of the first phase of Ara that it decides to participate. At the moment, it prefers to Damansara tower units in the third quarter of 2018. In total, participate in selective tenders over open tenders due to better this development is divided into three phases and it is planned competitiveness thus results in better probability in securing to span over five years with GDV of RM1.12 billion. awards in the selective tenders.

In Australia, the two development projects; Springridge Property development faces situational market condition Development in Wallan and East Edge Botanica Development in where there are times softening of property market due to Melbourne continue to progress well. Springridge Development current economic condition occurs. Changes of government or involves the construction and sales of subdivided of over 900 local council requirements such newly introduced Environment bungalow lots where this project is divided into fourteen Law, land zoning, etc. may become part of the risk in this phases. As of end 2017, the total GRV based on the sold units business. There are also risks associated in higher development are AUD 68.3 million. For the East Edge Botanica Development, cost when economy of scale cannot be achieved. Other risk the construction of hotel units has commenced in the last involved is due to the shifting of market preference on the quarter of 2017 as scheduled. This project is scheduled to development type because of changes in lifestyle or individual complete in the 1st quarter 2019. economic capabilities.

These associated risks are mitigated with careful feasibility studies done on each development such as market preference on the location, types and other value added facilities it can offer. Careful planning on the correct timing of its launching is also important.

Contractual Risks

The construction division of the Group enters into contracts with different clients with a variety of contract types such as design-and-build, conventional, lump sum, re-measurement, etc. Some form of contracts may be of higher risks compared to the others. The division must then study these contracts in all angles during the tender stage and make a calculated decision on the risks it is willing to take, based on the Group’s risk appetite.

8 TRC SYNERGY BERHAD Management Discussion & Analysis Disclosure (cont’d)

Any decision made is ultimately to ensure at the very best, these projects are delivered meeting the anticipated return. GROUP’S FUTURE OUTLOOK AND PROSPECTS Sufficiency of Labor For over thirty years the Group has been consistent in producing Being a construction and property development company, labor positive results, and it has every intention to continue the sufficiency at any given time is very crucial to ensure the right legacy. In year 2018, with the major projects in hand as production level and project progress is achieved. It is therefore described, the construction division is forecasting to achieve a important to note that the Group depends significantly on turnover value of RM1 billion, which will be the largest turnover foreign workers. As such any sudden legislative decision to to date. As also described, these major projects will keep the restrict foreign workers employment or tightening up the work Group busy for the next four years. requirements would have detrimental effect to its operations on the ground. Meanwhile, the Group will continue to look out and participate in any appropriate future tenders, individually or by forming These risks are being currently mitigated through forward strategic alliances such as collaborations or joint-ventures planning of the overall labour need of each project as well with suitable partners. In line with the Government mission to as working closely together with respective government enhance the transportation networks in the country, the Group bodies and agencies to understand, act and comply with such has prepared and positioned itself to be part of the major requirements ahead of time. players for these endeavours in both East and West Malaysia.

Overall actions The development division is targeted to play a bigger role in terms of income distributor to the Group for the next three Although the above identified risks are being mitigated with years with the launching of development projects is Putrajaya, relevant action plans described as above, the Group is also Ara Damansara and the existing progress of development consistently pushing for continuous improvement of its internal projects in Australia. procedures and decision making processes to ensure it operates in an effective manner. Variety of ways of internal controls to In short, the Group shall continue to focus on the business avoid unnecessary wastages and ineffective management are segments that it knows best, while searching for diversification put forward and religiously implemented. These efforts are of business opportunities. made in order to keep the good business reputation in terms of financial return and sound operations, which further secure the shareholders and stakeholders confidence of the Group.

ANNUAL REPORT 2017 9 Sustainability Statement

The Board of Directors of TRC Synergy Berhad (“the Board”) • To assist in local universities graduate always upholds the decent intention of the Government and employability; the initiative of the Bursa Malaysia to inculcate the culture • To encourage and inculcate philanthropies of corporate social responsibility (“CSR”) among the public awareness among the staffs and to support and listed companies. Since inception the Group has undertaken encourage community development; and numerous CSR activities in its own capacity with an intention • To continue improve public perception and to share the company’s profitability with the public. Moving experience of the Group. forward, the group acknowledges the need to move beyond CSR whereby the emphasis should also covers sustainability. A number of activities have been organized by the Group in 2017 which aimed to achieve the above objectives. Commencing from 2015, TRC Synergy Berhad (“the Company”) Amongst those activities are as follows:- and its subsidiary companies “(the Group”) had initiated needful steps to raise awareness and understanding of sustainability • A weekly morning exercise for all Head Quarters among its senior management and the necessary to gradually and some project sites staffs. Besides, an shift their mindset and focus in implementing the Group occasional sport tournament were also organized business activities. Since then the Group also embraced amongst the staffs; sustainability principles when it formulated and implemented • The Company provided free daily meals for its its business strategies based on sustainable long-term Head Quarters staffs; growth. Through this means the Group target to excel in its • The Company organized 10 training sessions performance as a corporate entity with broader perspective to for the Group’s staffs at its Centre of Excellence contribute to the nation’s progress, with care for the society’s located at the Head Quarters. Besides organizing well-being and the environment in which it operates. in-house trainings, the Group’s staffs, inclusive of the Board would also require to participate in relevant trainings/seminars organized by The Board is fully aware that the sustainability and the growth professional bodies that relevant to the respective of the Group’s business are dependent on the sustainability staffs’ field. During the year 2017 the Group spent of our country’s economy, environment and society as an RM12,650.00 for this purpose. integrated unit. • Donations were also given to the following entities:- Sustainability Policy and Principles i. Persatuan Bekas Artileri Malaysia; ii. Persatuan Diabetes Malaysia; In April 2017, the Company established its Sustainability iii. National Press Club Malaysia; Policy which aimed to integrate the following principles of iv. Retired Malaysian Naval Officer Association; sustainability into the Group’s business activities. and v. Kelab Anak Wawasan Pekan Pahang i. Social Sustainability (KAWAN)

Social sustainability efforts focus on the development of The Group also offered opportunities to undergraduate programs and processes that promote social interaction and diploma students of various public and private among the Group’s staffs as well as between the staffs universities and colleges especially those who are and local communities where the Group’s activities are in construction related courses to undergo practical located. It emphasizes on protecting the vulnerable, training at the Group Headquarters and site offices respecting social diversity and ensuring that the Group with the prospect of employment with the Group upon give proper attention on social capital and to achieve the completion of their studies. During 2017 fifty eight (58) following objectives:- practical students attached to the Group and RM92,166 had been paid to them in form of allowances. • To maintain a safe and healthy workforce; • To provide a safe and conducive workplace to all Besides, starting from October 2017, the Group also staffs and workers; participated in the Skim Latihan 1 Malaysia (SL1M) • To recruit and retain potential and high performing programme initiated by Economic Planning Unit (EPU), staffs; an agency under Prime Minister Office which aimed to • To use training and staffs development programme help unemployed young graduates to enhance their as a strategic investment for the Group and marketability with appropriate skills, knowledge and also to enable the staffs to further develop their working experiences throughout the training process. professional and personal skills; The Scheme is also aimed to increase the employability • To promote racial harmony and prevent racial of the graduates and possibility in advancing their career discrimination within the Group; in the future. The Group has recruited 15 trainees and • To prevent sexual harassment and other form of has spent RM37,110.95 on this programme for their violence against all staffs; allowances.

10 TRC SYNERGY BERHAD Sustainability Statement (cont’d)

In addition to the above activities, the Group also via • Monthly SHE committee meeting at all its yayasan which is called Yayasan TRC organized the project sites; following activities:- • Environmental Internal Audits at all project sites which were done on quarterly basis; • Extending educational aids to the eligible staffs • Environmental Promotion and Awareness family members as well as to sponsor eligible Program; and staffs to pursue out of campus degree programme; • HSE Coordination Meeting at Headquarter’s • Extending monetary support to eligible staffs level who suffers critical illness as well as for cases of deaths; b) Rewards • Extending monetary aids to students from less privileged families in conjunction with Chinese • Monthly reward to the Best Environmental New Year and Gawai celebrations; Personnel; and • Extending student’s excellence awards to eligible • Competition of best Subcontractor’s SHE staffs family members who excelled in their performance at all project sites on a quarterly primary examinations; and basis. • Sponsoring tuition sessions for UPSR students of a neighboring school. c) Training ii. Environmental Sustainability Series of trainings on environmental awareness have been organized throughout the year. The The Group is committed to identify, manage and trainings which cover the following subjects are minimize the environmental impact on it business aimed to continuously equip all staffs and site activities. A number of activities have been organized in workers with the necessary understanding and 2017 which aimed to promote environmental awareness awareness on the importance of the subject among staff and workers at the Group project sites. The matter:- activities which strategized into the following three categories have been well accepted and adapted by the • Waste Management project staffs and workers:- • Erosion and Sediment Control • Pollution on Environment (Air, Noise and a) General activities Water) • Environmental Aspect and Impact • Safety Health and Environment (“SHE”) • Environmental Regulations and Legislation induction classes at all project sites before • Environmental Management Plan work commencement; • Scheduled Waste Management

• SHE briefings which cover environmental Environmental Personnel were also required to issues such as waste management, attend related Courses and Trainings which cover:- air pollution, noise pollution, water pollution, erosion and sediment control • Certified in Sediment Erosion Control – conducted during Kick-off meeting before CISEC; subcontractors start work; • Certified Environmental Professional in Scheduled Waste Management CEPSWAM; • Weekly SHE inspection at all project sites; and • Monthly environmental monitoring work at • Certified Erosion and Sediment and Storm all project sites; Water Inspector – CESSWI.

ANNUAL REPORT 2017 11 Sustainability Statement (cont’d)

iii. Economic Sustainability

The Board recognized that the constructed items are vital to the pursuit of economic activity as they provide the space needed for the production of all goods and services. The physical infrastructure built through construction activity at great expense is the nation’s economic backbone as it constitutes the arteries for the facilitation of productive activity by enabling goods and services to be distributed. The items built also offer social and welfare benefits. For example, housing fulfils one of the most basic needs of people by providing shelter from the elements. Built items also offer people the opportunity to improve their living standards.

Therefore, the Board will ensure all works undertaken by the Group are completed on time and at the highest quality standard pursuant to the clients’ expectations. Project executions would be subject to Quality Management System in accordance with ISO 9001 : 2015. The Group also will strive to promote :-

• Increased value for money to industry clients as well as environmental responsibility in the delivery process; • The viability and competitiveness of domestic construction enterprises; and • Optimization of the role of all participants and stakeholders through process, technological, institutional enhancement and through appropriate human resource development.

12 TRC SYNERGY BERHAD Sustainability Statement (cont’d)

Education, Arts and Culture The Company also agreed to develop TRC Edu Centre at PUO which will be a Technology Enabled Collaborative Centre (TECC). Education The Centre will be equipped with Virtual Reality (VR) hardware and software which is in line with the Concept of Industry 4.0. In line with the above principles, the Group has embarked on a strategic collaboration with Jabatan Pendidikan The Centre will be utilised by PUO to promote active learning Politeknik (“JPP”) to draw up a strategic cooperation of both process particularly for the students in Civil Engineering as the parties in improving the quality of learning, especially in the Centre is equipped with computer simulations of actual reality field of construction in polytechnics throughout Malaysia in sustainable construction technology by virtual reality. The and subsequently producing quality human capital and Centre also will be a conducive space for practical talks and competitiveness to fill the needs of manpower in Malaysia session by the Group senior staffs to PUO students. especially in the field of construction. Arts and Culture Through the collaboration, both parties agreed to jointly: - As a sign of support to the efforts by local artists to empower • implement the “Work Based Learning” program which local art works, the Company has helped to establish a is part of the curriculum for the final year students of Community Art Gallery by providing exhibition and office space Bachelor of Civil Engineering Technology and Diploma at the Company’s Headquarters Building. The Jalak Art Initiative in Civil Engineering at Politeknik Ungku Omar (“PUO”) in was set up by Assoc. Prof Jailani Abu Hassan a well-established order to equip the students with real work experience; Malaysian artist with full support from the Company. • develop a conducive and modern learning center for the needs of the students majoring in Bachelor of Civil Apart from being a place where local artists and art students Engineering Technology in PUO; exhibit their artworks, the Jalak Art Initiative also organized • exchanging information and knowledge by conducting community art projects whereby series of talks and dialogues discussion sessions and lectures on the development of have been organised to discuss issues related to artists’ the Construction sector; developments and their art works. • assist in identifying and providing suitable employment opportunities to graduates of the Bachelor of Civil In addition, Jalak Art Initiative also organizes free workshops to Engineering Technology of PUO; and young artists to enhance the quality of their artwork. • provide practical exposure to the lecturers of PUO through the Lecturer Counseling program at the office or construction site operated by the Group.

ANNUAL REPORT 2017 13 Corporate Structure

TRC SYNERGY BERHAD (413192-D)

TRC CONCRETE 100% INDUSTRIES SDN BHD (151401-V)

LIPUTAN SUTERA TRANS RESOURCES 100% SDN BHD CORPORATION SDN BHD (637939-H) (120265-P) 100% PETROBRU BUILD 60% SDN BHD (RC/00007517)

TRC (B) SDN BHD 90% (RC/00008574) ADS PROJEK SDN BHD (1021828-M) 100% TRANS HANDAN BRIDGE SDN BHD 55% (1261951 T)

ENDAYA TRC PK JV SDN BHD 51% (1200274-H)

TRC INFRA SDN BHD (645178-P) 100% TRC SARAWAK SDN BHD 30% (621714-W)

TRC INTERNATIONAL PTE LTD 100% (LL04510) TRC LAND 100% (CAMBODIA) LIMITED (6234/09E) DELTA GARDEN 34% LIMITED TRC LAND SDN BHD (11524/08P) (444162-W) 100% TRC DEVELOPMENT 100% SDN BHD (309248-U)

SWAN SYNERGY 100% DEVELOPMENTS PTY LTD TRC (AUST) PTY LTD (ACN 151511018) (ACN 137500611) 100% PRETTY SALLY Holdings 33.33% PTY LTD (ACN 111744382)

TRC ENERGY SDN BHD PETROBRU (B) SDN BHD (616448-K) 100% 40% (AGO / RC / 6613 /06)

14 TRC SYNERGY BERHAD Corporate Information

Board of Directors Tun Jeanne binti Abdullah General (R) Tan Sri Dato’ Seri Mohd Shahrom Bin Dato’ Hj (Chairman , Independent Non-Executive Director) Nordin (Appointed on 1 December 2017) (Senior Independent Non-Executive Director)

Tan Sri Dato’ Sri Sufri bin Hj Mohd Zin Dato’ Ar. Nur Haizi binti Abdul Hai (Managing Director) (Independent Non-Executive Director)

Dato’ Abdul Aziz bin Mohamad Noor Zilan bin Mohamed Noor (Executive Director) (Independent Non-Executive Director)

Abdul Rahman bin Ali (Independent Non-Executive Director)

Siti Sarlina binti Abdul Rahman (Alternate Director to Dato’ Abdul Aziz bin Mohamad)

Auditors AljeffriDean (AF-1366) 2-1-1, 1st Floor, Menara KLH No. 2, Jalan Kasipillay 51200 Kuala Lumpur Company Secretary Tel : 03-2381 1170 Abdul Aziz bin Mohamed Fax : 03-2381 1175 (LS 007370) Share Registrar Registered Office / Mega Corporate Services Sdn Bhd Principal Place of Business Level 15-2, Sheraton Imperial Court TRC Business Centre Jalan Sultan Ismail Jalan Andaman Utama 50774 Kuala Lumpur 68000 Ampang Tel : 03-26924271 Selangor Fax : 03-27325388 & 03-27325399 Tel No. : 603-41038000 Fax No. : 603-41087016 Principal Bankers e-mail : [email protected] Hong Leong Bank Berhad Solicitors Alliance Bank Malaysia Berhad Messrs Noorzilan & Partners Branch Office HSBC Bank Malaysia Berhad Messrs C.C. Choo, Hazila & Teong Lot 3626, Block 16, KCLD Affin Bank Berhad Messrs Zain Megat & Murad Taman Timberland, Lorong Rock 2 AmBank (M) Berhad Messrs Jeff Leong, Poon & Wong 93200 Kuching, Sarawak Malayan Banking Berhad Messrs Adam Bachek & Associates Tel No. : 082-239998 United Overseas Bank Berhad Fax No. : 082-421998 RHB Bank Berhad Stock Exchange Listing CIMB Bank Berhad Bursa Malaysia Securities Berhad Website Standard Chartered Bank Malaysia Main Market (Construction) www.trc.com.my Berhad Stock No. 5054

ANNUAL REPORT 2017 15 Profile of Directors

Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin Tun Jeanne Binti Abdullah (Managing Director) Malaysian / Male / 62 years of age (Independent Non-Executive Director) (Appointed on 1 December 2017) Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin is the founder of TRC Malaysian / Female / 65 years of age Group. He was appointed as the Managing Director of TRC Chairman Synergy Berhad on 29 March 2002. He was the Executive Chairman of the Company before being re-designated as Tun Jeanne Binti Abdullah was appointed as a Director of Managing Director. He is also the Managing Director of the the Company on 1st December 2017. She then was re- Group’s subsidiary Companies. designated as Chairman of the Company on 27 February 2018. The Honourable Tun Jeanne Binti Abdullah is Tan Sri Dato’ Sri Sufri graduated from MARA Institute the wife to the Former Prime Minister of Malaysia, of Technology in 1982, with a Diploma in Business Tun Abdullah Ahmad Badawi. The Honourable Tun Jeanne Studies. He began his career with Standard Chartered Binti Abdullah is the Chancellor of Open University Bank before joining Bank Bumiputera Malaysia Berhad as an international banking division officer. He pursued Malaysia, Chairman of Landscape Malaysia and Tropical a Bachelor Degree in Jurisprudence at Universiti Malaya Rainforest Conservation and Research Centre, Executive before pursuing a Master Degree in Business Law at Chairman of Sekretariat Malaysia Prihatin and Patron of Universiti Kebangsaan Malaysia in 2014. the Malaysian Paralympic Council. In August 2009, Tan Sri Dato’ Sri Sufri was selected as She received an honorary degree from University Malaysia one of the winners of the Outstanding Entrepreneurship Kelantan for Sustainability Science and from University of Award organized by Enterprise Asia. Tan Sri Dato’ Sri Sufri Nottingham for her outstanding advocacy in conservation. achieved a personal milestone when he was honored as the CEO of the Year by the Construction Industry During the Financial year ended 31 December 2017 she Development Board (CIDB) in 2009. did not attend any Board of Directors Meetings held during the year as she was appointed to the Board on Tan Sri Dato’ Sri is the Vice President and Council Member 1 December 2017. of Master Builder Association Malaysia (2016-2018), a member of the Road Engineering Association of Asia and Australia (REAAA) and the Corporate Advisor to Persatuan Kontraktor-Kontraktor Melayu Malaysia (Cawangan Wilayah Persekutuan). He is a Board Member to Tun Hussein Onn University Malaysia, CEO Faculty and Industry Advisory Council (IAG) Poleteknik Education Department (2017 – 2019). In March 2017, Tan Sri was appointed as Industry Panel Advisor to Polytechnic Civil Engineering Technology degree programme by the Ministry of Higher Education. Tan Sri is also a Trustee of Yayasan TRC.

During the Financial year ended 31 December 2017 he attended all five Board of Directors Meetings held during the year.

16 TRC SYNERGY BERHAD Profile of Directors (cont’d)

General (R) Tan Sri Dato’ Seri Mohd Shahrom Dato’ Abdul Aziz Bin Mohamad Bin Dato’ Hj Nordin (Executive Director) (Senior Independent Non-Executive Director) Malaysian / Male / 59 years of age Chairman Audit Committee Malaysian / Male / 70 years of age Dato’ Abdul Aziz Bin Mohamad was appointed as an Executive Director of the Company on 29 March 2002. General (R) Tan Sri Dato’ Seri Mohd Shahrom Bin Dato’ Hj He joined TRC Group’s, Trans Resources Corporation Sdn Nordin was appointed as a Director on 25 March 2004. He Bhd as a Senior Contract Executive in 1994 and now holds then was re-designated as Chairman of the Company on 1 the post of Chief Executive Officer (CEO) of that subsidiary April 2015 before he relinquished his chairmanship on 27 company. February 2018.

He had his early education in the Malay College Kuala He started his career as Officer Cadet training at the Kangsar (MCKK) and graduated from Trent Polytechnic in Royal Military College, Sungai Besi in 1966 and was Nottingham, England in 1983. He is a Quantity Surveyor commissioned as a Second Lieutenant into the Royal by profession and a member of the Royal Institution of Malay Regiment in 1968. General (R) Tan Sri Dato’ Seri Surveyors, Malaysia. He started his career as an Assistant Mohd Shahrom has served in various appointments at Quantity Surveyor in England with Rider Hunt and Partners command, staff, training and the diplomatic services in 1982 and later joined Jabatan Kerja Raya (JKR) in 1983 levels and he was the Chief of the Malaysia Army from as a Quantity Surveyor until subsequently joining TRC. 1st January 2003 to 15 September 2003. Prior to that Dato’ Abdul Aziz is also a Board Member of Yayasan Ulul appointment he was the Chief of Staff at the Armed Forces Albab, a Trustee of Yayasan TRC and a Board Member of Headquarters. Currently he is the Executive Director Universiti Malaysia Terengganu. (Defence and Aerospace Manufacturing) of the National Aerospace & Defence Industries Sdn Bhd (NADI). He is also Dato’ Abdul Aziz attended all five Board of Directors a Director of SME Ordnance Sdn Bhd (SMEO) a subsidiary Meetings held during the financial year ended company of the NADI Group of Companies. 31 December 2017. General (R) Tan Sri Dato’ Seri Mohd Shahrom is also the Chairman to the Audit Committee and the Senior Independent Non-Executive Director of the Company. He is also the Chairman of Yayasan TRC.

During the financial year ended 31 December 2017 he attended all five Board of Directors Meetings held.

ANNUAL REPORT 2017 17 Profile of Directors (cont’d)

Noor Zilan Bin Mohamed Noor Dato’ Ar. Nur Haizi Binti Abdul Hai (Independent Non–Executive Director) (Independent Non-Executive Director) Malaysian / Male / 58 years of age Malaysian / Female / 63 years of age Noor Zilan Bin Mohamed Noor was appointed as a Director Dato’ Ar. Nur Haizi Binti Abdul Hai was appointed as a of the Company on 13 May 2002. He graduated from Director of the Company on 1st July 2015. She graduated Institut Teknologi Mara (ITM) in 1983 with a Diploma in from Universiti Teknologi Malaysia in 1978 with a Degree Law. He then joined United Malayan Banking Corporation in Architecture. After graduation, she joined the Public as a Trainee Executive Officer before pursuing for further Works Department, Malaysia and entrusted to hold studies in the United Kingdom in 1984 and graduated from various posts starting with a Design Architect in 1978. City of London Polytechnics with LLB (Hons) majoring in She retired from the Public Works Department in 2012 Business Law in 1987. Subsequently, he went on to read after 34 years of service and her last position was Deputy Law at Lincoln’s Inn and was called to the English Bar in Director General III. 1988 and upon returning to Malaysia he was then called and admitted to the Malaysian Bar in 1989 as an Advocate While in the Public Works Department, she was involved & Solicitor. He then worked as a Legal Assistant before at various stages as a designer/architect, Project Manager, starting his own law firm in 1991 and is now a Senior Project Director in various high profile and mega projects Practitioner with an established law firm in Kuala Lumpur implemented by the Department some of which have specializing in the area of Corporate Law, Banking, Building become National Landmarks locally and overseas. and Construction Law apart from civil & criminal litigation.

In September 2017, she was honored to receive “The Noor Zilan is a member of the Audit Committee and Construction Leading Lady Award” at the Malaysian the Chairman to the Nomination Committee and Construction Industry Excellence Awards 2017 (MCIEA) by Remuneration Committee. He attended all five Board the Construction Industry Development Board (CIDB). of Directors Meetings held during the financial year ended 31 December 2017. She attended three (3) Board of Directors Meetings held during the financial year ended 31 December 2017.

18 TRC SYNERGY BERHAD Profile of Directors (cont’d)

Siti Sarlina Binti Abdul Rahman Abdul Rahman Bin Ali (Alternate Director to Dato’ Abdul Aziz Bin Mohamad) (Independent Non–Executive Director) Malaysian / Female / 48 years of age Malaysian / Male / 61 years of age Siti Sarlina Binti Abdul Rahman was appointed as Deputy Abdul Rahman Bin Ali was appointed as a Director of the Chief Executive Office on 1st July 2015 and appointed as Company on 13 May 2002. He graduated from University an Alternate Director to Dato’ Abdul Aziz Bin Mohamad of Malaya in 1982 with a Degree in Accounting. He on 28 November 2016. She joined the Group as a Quality is currently a Chartered Accountant of the Malaysian Assurance Manager in 2002. Since 2005, she was directly Institute of Accountants. Upon graduated, he started his involved in various projects undertaken by the Group and training with financial institution for a number of years assumed key positions such as Project Head and General before joining public accountancy practice. In 1994, he Manager. set up his own accounting firm by the name A. Rahman & Associates and later become a partner of AKN Arif in 1996. She started her career as Sales Engineer in an IT company in 1994 before moving to Airod Sdn Bhd as Planning Abdul Rahman is a member of the Audit Committee, Engineer in 1995. In 1996, she joined Pesaka Gammon Nomination Committee and Remuneration Committee. He Sdn Bhd as Site Planning and QC Engineer. In 1997, she attended all five Board of Directors Meetings held during worked as a QA Engineer at Putra Perdana Construction the financial year ended 31 December 2017. Sdn Bhd until 2002.

She is a Diploma holder in Applied Science from Kolej Persediaan Pengajian Mara, Subang Jaya and a graduate of State University of New York at Buffalo with a degree in Aerospace Engineering in 1993, and also holds a Master Degree in Human Resource Management from Open University Malaysia (OUM).

Notes:-

Save as disclosed,

1) none of the Directors have:- i) any family relationship with any director and/or major shareholders of the Company; ii) any conflict of interest with the Company; and iii) any conviction for offences (other than traffic offences) within the past five (5) years.

2) none of the Directors holds directorship in other public companies and listed issuers.

ANNUAL REPORT 2017 19 Seated, From left to right:

Dato’ Ar. Nur Haizi Binti Abdul Hai (Independent Non-Executive Director) Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin (Managing Director) Tun Jeanne Binti Abdullah (Chairman, Independent Non-Executive Director) Dato’ Abdul Aziz Bin Mohamad (Executive Director) General (R) Tan Sri Dato’ Seri Mohd Shahrom Bin Dato’ Hj Nordin (Senior Independent Non-Executive Director)

Standing, From left to right:

Siti Sarlina Binti Abdul Rahman (Alternate Director to Dato’ Abdul Aziz Bin Mohamad) Muhamad Shahaizi Bin Abdul Hai Noor Zilan Bin Mohamed Noor (Independent Non–Executive Director) Abdul Aziz bin Mohamed (Company Secretary) Dato’ Richard Khoo Teng San (Chief Operating Officer) Abdul Rahman Bin Ali (Independent Non–Executive Director)

20 TRC SYNERGY BERHAD Profile of Senior Management

Dato’ Leong Dato’ Leong Kam Heng graduated from Monash University, Melbourne with an Honours Degree in Kam Heng Civil Engineering in 1979. Upon return to Malaysia in 1980, he joined the Public Works Department Chief Operating Officer (“PWD”) as a building engineer. In 1984 he resigned from PWD and ventured out into the building TRC (Aust) Pty Ltd and construction industry. He joined TRC Synergy Berhad since January 2009 as Head of Corporate 63 years of age, Male & International Investment. He is also the Chief Operating Officer to TRC (Aust) Pty Ltd, a wholly- Malaysian owned subsidiary of TRC Synergy Berhad.

Dato’ Leong is one of the registered proprietors of the Springridge Estate, 1/3 of which is also owned by TRC (Aust) Pty Ltd, the wholly-owned subsidiary of TRC Synergy Berhad. The land is now being developed by Pretty Sally Holdings Pty Ltd, an associate company of TRC Synergy Berhad. Dato’ Leong is also one of the directors as well as one of the shareholders of Pretty Sally Holdings Pty Ltd.

Dato’ Richard Dato’ Richard Khoo Teng San was appointed as Chief Operating Officer on 1 January 2009. He joined Khoo Teng San the Group as a Project Coordinator on 13 December 1991. Before joining the Group, he started Chief Operating Officer his career as Project Engineer at Mat Taib bin Husin Sdn Bhd (1989-1990). In 1990 he joined W.A 53 years of age, Male Fairhusrt & Partners UK (1990-1991) as a Design Engineer. Malaysian Before being appointed as Chief Operating Officer, he was entrusted to assume important positions in the Group such as Project Coordinator, Region Manager (East Malaysia) and Chief Project Coordinator for various mega projects undertaken by the Group.

He graduated with a Bachelor of Engineering (Civil Engineering) from University of Strathcylde (UK) in 1989.

Loh Leh Wong Loh Leh Wong was appointed as Commercial Director on 1st September 2015. He joined the Group Commercial Director as Contract Manager in 1996. 61 years of age, Male Malaysian He started his career as Assistant Quantity Surveyor at Bucknall Austin & Partners, England (1983- 1985) before working as a Project Quantity Surveyor at Group Survey Four in Sarawak from 1985 until 1987. He also worked as a Project Manager at Yung Kong Construction Sdn Bhd in 1988 before joining Akron Construction in 1991 as a Managing Partner.

He graduated from Nottingham Trent University with Bachelor Science in Quantity Surveying in 1983. He is a member of Royal Institution of Chartered Surveyors and a registered Consultant Quantity Surveyor.

YEOH SOOK KENG Yeoh Sook Keng was appointed as a Head of Corporate Services on February 26, 1996 and his Chief Financial Officer position was subsequently redesignated to a Chief Financial Officer on January 1, 2010. He 60 years of age, Male graduated from the University of New South Wales, Australia in 1981 with a Bachelor of Commerce Malaysian degree in Accounting and Finance. He is currently a Chartered Accountant of the Malaysian Institute of Accountants.

Upon graduation, he started his career as an audit senior in an accountancy firm before pursuing his career as a banker in Kwong Yik Bank Berhad and subsequently Asia Commercial Finance Bhd. He then left the banking industry to gain commercial experience in Paramount Corporation Bhd. His last position before joining the Group was a Deputy General Manager with Lingui Development Bhd.

ANNUAL REPORT 2017 21 Profile of Senior Management (cont’d)

Muhamad Shahaizi Muhamad Shahaizi Bin Abdul Hai was appointed as Group General Manager on 1st January 2008. He Bin Abdul Hai joined the Group as a Project Manager on 16 February 1995. Before assuming his current position, Group General Manager he was entrusted to be a project coordinator for various projects undertaken by the Group. 60 years of age, Male Malaysian Before joining the Group, he started his career at Jabatan Kerja Raya as Civil Engineer in August 1984 before joining Perunding Sharma and Zakaria Sdn Bhd in September 1995 as Design Engineer and Resident Engineer.

He graduated from University of Missouri-Rolla, USA with Bachelor of Science in Civil Engineering in 1984.

Muhamad Shahaizi is a brother in law to one of the Director of the Company, Dato’ Abdul Aziz Bin Mohamad and a brother to Dato’ Ar. Nur Haizi Binti Abdul Hai.

SITI SARLINA BINTI Siti Sarlina Binti Abdul Rahman was appointed as Deputy Chief Executive Office on 1st July 2015 ABDUL RAHMAN and appointed as an Alternate Director to Dato’ Abdul Aziz Bin Mohamad on 28 November 2016. Deputy Chief She joined the Group as a Quality Assurance Manager in 2002. Since 2005, she was directly involved Executive Officer in various projects undertaken by the Group and assumed key positions such as Project Head and 48 years of age, Female General Manager. Malaysian She started her career as Sales Engineer in an IT company in 1994 before moving to Airod Sdn Bhd as Planning Engineer in 1995. In 1996, she joined Pesaka Gammon Sdn Bhd as Site Planning and QC Engineer. In 1997, she worked as a QA Engineer at Putra Perdana Construction Sdn Bhd until 2002.

She is a Diploma holder in Applied Science from Kolej Persediaan Pengajian Mara, Subang Jaya and a graduate of State University of New York at Buffalo with a degree in Aerospace Engineering in 1993, and also holds a Master Degree in Human Resource Management from Open University Malaysia (OUM).

IR. TAN KHOON KIAN Tan Khoon Kian was appointed as a Construction & Planning Manager on 1st July 1996 and his Deputy Chief position was subsequently redesignated to a Project Coordinator on 2001. He was then appointed Operating Officer as Chief Project Coordinator in 2011 and promoted as Deputy Chief Operating Officer in 2015 which 55 years of age, Male is his current position. Malaysian He graduated from the University of Adelaide, Australia in April 1987 with a Bachelor of Engineering (Civil) (Class II A Honours) and also holds Master in Business Administration (MBA) from Herriot- Watt University, Edinburgh, Scotland in July 1998.

He is currently a Professional Engineer with Practising Certificate (PEPC) of the Board of Engineers, Malaysia and a Corporate Member of Institution of Engineers, Malaysia.

Upon graduation, he started his career as a Junior Engineer in Gibb Australia Pty Ltd before pursuing his career as a Civil Engineer at PS Consultant and subsequently at Building Consultants as Structural & Civil Design Engineer. He then rejoined PS Consultant to become Assistant Resident Engineer and later promoted to Resident Engineer. His last position before joining the Group was a Planning Monitoring Manager with Hock Seng Lee Berhad.

Notes:- Save as disclosed, 1) none of the Senior Management have:- i) any family relationship with any director and/or major shareholders of the Company; ii) any conflict of interest with the Company; and iii) any conviction for offences (other than traffic offences) within the past ten (10) years. 2) none of the Senior Management holds directorship in other public companies.

22 TRC SYNERGY BERHAD Corporate Governance Overview Statement

The Board of Directors of TRC Synergy Berhad (“the Board”) is pleased to present the Corporate Governance Overview Statement (“this Statement”) which aimed to provide shareholders and investors of TRC Synergy Berhad (“the Company”) with an overview of the corporate governance (“CG”) practices of the Company during the financial year 2017. This Statement is prepared based on the key CG principles as set out in the Malaysian Code on Corporate Governance (“the Code”).

This Statement is prepared pursuant to Paragraph 15.25(1) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements (“MMLR”) and it is to be read together with the CG Report of the Company which is available on the Company’s website at https://goo.gl/J2aw9h.

PRINCIPLE A : BOARD LEADERSHIP AND EFFECTIVENESS

1. Board Responsibilities

The Board has overall responsibility in the stewardship of the Group’s direction and its performance. The Board is also primarily responsible for determining the Company’s strategic objective and policies and to monitor the progress toward achieving the objectives and policies. In this regard the Board is guided by a Board Charter which outlines the roles and responsibilities of Directors and other functions as recommended by the Code. The Board Charter is aimed to promote high standard of corporate governance and is designed to provide guidance and clarity for Directors and management with regard to their role and the role of the Board’s committees.

To ensure the effectiveness in discharging its duties and responsibilities, the Board has delegated certain responsibilities to the Management and the committees appointed by the Board. The Board has established and delegated certain responsibilities to the following three (3) Board Committees, namely:-

i. Audit Committee ii. Nominating Committee iii. Remuneration Committee

Each committee operates its functions within their approved terms of reference by the Board which are periodically reviewed by the Board. The Board also delegates the authority and responsibility for managing the day-to-day business activities of the Group to the Group Managing Director and the Executive Director who are responsible for overseeing the business development, implementation of the corporate strategies and business plans, policies and controls.

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

The Board members have unrestricted and timely access to all information pertaining the Group’s business and affairs whether as a full Board or in their individual capacity in carrying out their duties and responsibilities effectively. They also have direct access to the advice and services of the Company Secretary, senior management team, internal and external auditors and other independent professional at all times and at the Company’s expense.

2. Board Composition

The Board currently consists of seven (7) members comprising two (2) Executive Directors and four (5) Independent Non- Executive Directors. The Company fulfils the prescribed requirement of having at least one-third (1/3) of the Board Members as Independent Non-Executive Directors as stated in Paragraph 15.02 of the Listing Requirements of Bursa Malaysia.

The Board is headed by the Group Managing Director who has detailed knowledge and vast experience in the construction industry. The rest of the Board members possess a wide range of skill and experiences ranging from construction, finance, architecture, legal and general management discipline suitable for managing the Group businesses.

ANNUAL REPORT 2017 23 Corporate Governance Overview Statement (cont’d)

2. Board Composition (Contd.)

Currently, the Company does not have Board Policy in formalizing its approach to boardroom diversity. The Board however, strongly support and concur to the initiative to have women participation in the Board as well as in its senior management team. In 2015, the Company appointed Dato’ Ar. Nur Haizi Binti Abdul Hai (f) as its additional Director and Puan Siti Sarlina Binti Abdul Rahman (f) as Deputy Chief Executive Officer to its wholly-owned subsidiary company. Puan Siti Sarlina was then appointed as Alternate Director to Dato’ Abdul Aziz bin Mohamad. In December 2017, the Company appointed Tun Jeanne Binti Abdullah (f) as its additional Director whom was redesignated as Chairman to the Board in February 2018.

Based on the review of the Board composition in 2017 and after considering the recommendation from the Nominating Committee, the Board agreed to maintain the Board size at 7. They also agreed that the current Board individual qualifications and their mixed of skills augur well with the Group current business activities.

The Board acknowledges the recommendation from the Code that the tenure of the Independent Director should not exceed a cumulative term of nine (9) years. Presently the Company has five (5) Independent Directors, three (3) of them have served as Board Members for a cumulative term of more than twelve (12) years. The Company sought shareholders’ approval to retain three (3) of them as Independent Directors in its 20th Annual General Meeting (“AGM”) held in May 2017.

In compliance with the Code’s recommendation, the Company will not seek shareholders’ approval in its 21st (“AGM”) to retain all three (3) of its Independent Directors who have served as directors for more than twelve (12) years and they will be redesignated as Non Independent Non Executive Directors upon conclusion of the 21st AGM.

3. Remuneration

The Board acknowledges that the level or remuneration of the Directors and senior management should reflect the level of responsibility and contributions toward the successful and efficient running of the Group’s activities.

To assist in discharging its duties, the Board has established a Remuneration Committee in May 2002 which currently comprises of two (2) members, all of whom are Independent Non-Executive Directors.

The Committee is primarily responsible in the development, review and recommendation of fair remuneration package for Executive Directors in all its forms, drawing from outside advice as necessary.

The duties of the Remuneration Committee are among others, to review and recommend the remuneration package of the members of the Board of Directors of the Company and the Senior Management of the Group in order to attract and retain competent executives who can add value to the Company. The determination of remuneration packages of the Board members and the Senior Managements are a matter of the Board.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

1. audit Committee

The Audit Committee of the Company (“AC”) was established by the Board with the primary objective to assist the Board in fulfilling its fiduciary responsibilities particularly relating to business ethics, policies and practices and financial management and control. It comprises three (3) Non-Executive Directors and all of them are Independent Directors. AC is chaired by General (R) Tan Sri Dato’ Seri Mohd Shahrom Bin Dato’ Hj Nordin who has vast experience in general management. He is assisted by En Abdul Rahman Bin Ali who is a senior chartered accountant of the Malaysian Institute of Accountants and En Noor Zilan Bin Mohamed Noor, a senior legal practitioner.

During the financial year ended 31 December 2017, the Audit Committee met five (5) times with full attendance. The full details of the activities undertaken by the AC during the financial year ended 31 December 2017 are set out on pages 30 to 31 of this Annual Report.

AC is guided by the terms of reference which can be viewed at the Company’s website www.trc.com.my.

24 TRC SYNERGY BERHAD Corporate Governance Overview Statement (cont’d)

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT (CONT’D)

2. Risk Management and Internal Control Framework

The Board recognises that proper risk management and internal control are important aspects of a company’s governance, management and operation. The Board takes overall responsibility for maintaining the effectiveness and adequacy of the Group’s system of Internal Control and risk management which includes the establishment of an appropriate control and risk management framework as ongoing process for reviewing and monitoring the adequacy and integrity of these systems. The whole control process will cover not only financial aspects but also control relating to operations, risk management, compliance with statutory rules and regulatory guidelines to sustain ethical values and to promote effective governance structure.

The Board is of the view that the system of internal control and risk management in place during 2017, is sound and sufficient to safeguard the Group’s assets, as well as shareholders’ investments, and the interests of customers, regulators, employees and other stakeholders. The details of the Risk Management and Internal Control are set out in the Statement on Risk Management and Internal Control on pages 26 to 28 of this Annual Report.

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

1. communication with Stakeholders

The Board is fully aware that the key element of good corporate governance is the effective communication and proper dissemination of all important issues and major development concerning the Company to all shareholders and investors. Effective communication channels with the Company’s shareholders, investors and the public are maintained through timely announcements and disclosures made to Bursa Malaysia and when necessary, the dissemination of press releases.

During the financial year ended 31 December 2017, the Company organized a number of meetings and briefings with financial analysts to establish better understanding of the Company’s objective and performance and to convey other information that may affect shareholders interest.

The Company also has a cordial relationship with reporters who have been playing a very effective role in conveying the Group’s information to the public, shareholders and investors. Press releases are also occasionally organized to clarify on certain matters related to the Company and its operating unit.

2. Conduct of General Meetings

The Company’s General Meetings remain the primary channel of communication with the Company’s shareholders in particular private investors. At each General Meeting shareholders are encouraged and given sufficient time and opportunity to participate in the proceedings, to raise questions and participate in discussions pertaining the operation and financial aspects of the Group. They may seek clarifications on the Group’s performance, major development as well as on the resolutions being proposed. All Board members, senior management team as well as the Company’s external auditors are available to respond to shareholders’ relevant questions raised at the meeting.

Further, in line with good CG practice, the notice of the 21st Annual General Meeting (“AGM”) of the Company was issued more than 28 days before the AGM date.

The voting process at the 20th AGM was conducted through electronic voting system. The Company continues to explore the leveraging of technology, to enhance the quality of engagement with its shareholders and facilitate further participation by shareholders at AGMs of the Company.

This CG Overview Statement was approved by the Board of Directors of the Company on 27 March 2018.

ANNUAL REPORT 2017 25 Statement on Risk Management and Internal Control

The Board of Directors of TRC Synergy Berhad (“the Board”) is pleased to provide the following statement, which outline the nature and scope of risk management and system of internal control of the Company and its subsidiaries (“the Group”) during the financial year 2017. This statement is prepared pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”) and guided by the latest Statement on Risk Management and Internal Control : Guidelines for Directors of Listed Issuers (“the Guidelines”).

BOARD RESPONSIBILITY

The Board acknowledges its overall responsibility for maintaining the effectiveness and adequacy of the Group’s system of Internal Control and risk management which includes the establishment of an appropriate control and risk management framework as ongoing process for reviewing and monitoring the adequacy and integrity of these systems. The whole control process will cover not only financial aspects but also control relating to operations, risk management, compliance with statutory rules and regulatory guidelines to sustain ethical values and to promote effective governance structure.

The internal control system also involves the core business and its key management, including the Board, and is designed to safeguard the Group’s business objectives and to manage the risk to which it is exposed. The system of Internal Control also aims to :-

i) safeguard shareholders’ interest and the assets of the Group; ii) ensure that proper documentation and accounting records are maintained; and iii) ensure that the documentation and financial information generated by the system are reliable.

The Board is fully aware that this system, by its nature, can only provide reasonable and not absolute assurance against the risk of material misstatement of financial information and records or against financial losses due to fraud and error. These systems are designed to manage and mitigate, rather than eliminate, the risk of failure to achieve business objectives of the Group.

The Board’s responsibility for internal control does not cover those of the associated companies which are separately managed.

RISK MANAGEMENT

The Board views risk management as an important process in the pursuit of the Group’s corporate governance agenda. It is an ongoing process which involves different levels of management to identify, evaluate, monitor, manage and mitigate the risks that may affect the achievement of its business and corporate objectives.

The Group has in place an on-going process for identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives. This is an on-going process, subject to regular review by the Board, and accords with the Guidelines.

The Group adopts a decentralised approach to risk management by encouraging participation of all employees in such a manner that the employees take ownership and responsibility for risks at their respective levels. The process of risk management and policy implementation is overseen by the senior management and report to the Board through the Audit Committee. The risk management framework is also embodied in the Quality Policy in accordance with ISO 9001 : 2015 practiced by a wholly-owned subsidiary of the Company which is the major revenue contributor to the Group.

In order to equip the employees with adequate knowledge and awareness on risk management control, the Company send them to attend risk related seminar and workshop. This will keep them abreast with the current issues and dealing with the emerging risk. Besides in 2017, few workshops and brainstorming sections were conducted by Group’s Quality units to identify the departmental and project risks. The seminar were also aimed to emphasize and inculcate culture of Risk Based thinking within the organization.

Risk Management Framework

Risk Management activities are guided by Group Risk Management Framework. The risk universe covers a whole range of activities to determine the risk profile inherent from the nature of business which would compromise the business objectives if it is not properly addressed. Risk factors can be classified into two main categories as external and internal risk.

26 TRC SYNERGY BERHAD Statement on Risk Management and Internal Control (cont’d)

RISK MANAGEMENT (cont’d)

Risk identification, evaluation and Ranking

The management of each Business Unit as well as Projects undertaken by the Group are required to identify and document all possible risks that can affect their achievements. It is the responsibility of the Operational Managers and Head of Departments to identify risk that may have impact in meeting the business objectives of each Business Unit and Project.

Risk identification process shall take into consideration specific risks in achieving business objectives and risks that have potential impact on the success and continuity of the business. The identified risks are evaluated as below:

• Probability or likelihood of occurrence • Significance of the risk

Risk Mitigation Measure

Risk mitigation measures are formulated to manage the risks and among them are:

• Sustaining good client relationship • Adequate insurance coverage • Monitoring projects within budgeted cost and margin • Stringent quality and safety standard • Efficient procurement management system • Close monitoring of work progress • Comply with relevant government agencies on statutory requirement

Risk Reporting and monitoring

Each Business Unit and project identified risk are tabulated in the risk assessment report and presented to Senior Management and Audit Committee for deliberation. Risk monitoring is an ongoing process whereby annual assessment will be done and to be presented to the Audit Committee.

INTERNAL CONTROL

The key elements of the Group’s internal control system are described below:-

Internal Audit Function

The Board is fully aware of the importance of the internal audit function and has established the Internal Audit Department for the Group in 2004. The main objective of this department is to review the key business processes and controls and to assists the Audit Committee in the discharge of its duties and responsibilities. Its role is to provide independent and objective reports on the organization, management, accounting and other records, accounting policies and internal controls to the Audit Committee and the Board. As required by the Listing Requirements, the Internal Auditors report directly to the Audit Committee and is independent of the activities its audits. They provide periodic reports to the Audit Committee on the outcome of the audit works conducted by them which would be reviewed and evaluated by the Audit Committee.

Internal audit works are carried out pursuant to the annual audit plan approved by the Audit Committee as well as the Board. The internal audit process provides an assessment of the adequacy, efficiency and effectiveness of the Group’s existing internal control system and recommends improvements in control. The results of the audit reviews are reported periodically to the Audit Committee. In addition, the internal auditors also carried out follow-up visits to ensure recommendations for improving control systems are implemented. The presence of the internal audit function has provided the necessary level of assurance as to the effectiveness and credibility of the Group’s system of internal control.

Throughout the financial year ended 31 December 2017, the Internal Audit Department has undertaken several independent audit assignments pursuant the approved audit plan. The details of the internal audit activities are reported on pages 31 to 32 of this Annual Report.

ANNUAL REPORT 2017 27 Statement on Risk Management and Internal Control (cont’d)

INTERNAL CONTROL (CONT’D)

Internal Audit Function (cont’d)

None of the weaknesses or issues identified during the review for the financial year ended 31 December 2017 has resulted in non-compliance with any relevant policies or procedures, Listing Requirements and other recommended industry practices that require disclosure in the Company’s Annual Report.

Quality Policy

The main revenue contributor of the Group has a clear and well documented Quality Policy in accordance with ISO 9001 : 2015. This policy and the related procedures are communicated to the respective staff. Amongst the salient features of the Quality Policy are as follows:-

i) Internal Quality Audits are conducted at planned intervals to determine whether the Quality Management System is effectively implemented and maintained and conforms to the established system requirements of Internal Standard, ISO 9001:2015. ii) On an annual basis, an overall Internal Quality Audit Plan is devised encompassing every departments and projects, taking into consideration the status and importance of relevant process, areas to be audited as well as results of previous audits. iii) Qualified Internal Quality Auditors will be assigned with audit works in accordance with the Internal Quality Audit Plan where the reports shall be examined and analyzed and reported to the management during Management Review Board Meeting. iv) As part of the Quality Management System, the management shall meet on monthly basis to discuss and deliberate all issues relating to the business of the Group. v) There is an annual Management Review Board Meeting carried out to report and discuss on the overall quality performance the quality management system and the projects undertaken. The Review Board members would also discuss and endorse on any identified action plans that need to be carried out for further improvements. vi) The Audit Committee is accessible to the relevant reports produced in relation to the Quality Management and if the need arise, the matter shall be further discussed in the Board Meeting.

Amongst the initiatives to ensure projects success is to embark and implement risk management strategies by identifying project’s strengths, weaknesses, opportunities and threats, be it from internal or external factors. This is done at the early stage of the project, and ways to handle them if such risk occurs are also identified.

Monitoring of these risks is done on monthly basis by respective project team members, and red flag will be raised if any of these risks would pose a threat to the health of the project, for immediate and necessary actions to be taken.

Line of Reporting

Clear definition to the terms of reference including functions, authorities and responsibilities of the committees established by the Board for all aspects of the business have been established within the Group. This also includes detailed job description and specification provided to each employee of the Group which is further reiterated through a well-defined organizational structure.

Dissemination of Information within the Group

Regular and comprehensive information is provided to management covering financial performance and key business indicators, key operating statistics/ indicators, key business risks, legal, environmental and regulatory matters. Key matters affecting the Group are brought to the attention of the Audit Committee and are reported to the Board on a regular basis.

Detail Budgeting Process

A detailed budgeting process has been implemented where operating units prepare budgets for their project which will be deliberated in the management meeting. A monthly monitoring of results against budget, with major variances being explained and deliberated. If necessary, management action and follow up would be initiated.

28 TRC SYNERGY BERHAD Statement on Risk Management and Internal Control (cont’d)

INTERNAL CONTROL (CONT’D)

Audit Committee

The Audit Committee, on behalf of the Board, regularly reviews and holds discussions with the management and external auditors on the matters relating to internal control and corporate governance of the Group.

The Report on the Audit Committee set out on pages 30 to 31 of this Annual Report contains further details on the activities undertaken by the Audit Committee in 2017.

Board

The Board holds regular discussions with the Audit Committee, management and external auditors and reads their reports on matters relating to internal controls and deliberates on their recommendations for implementation.

The Directors have taken the necessary steps, as are reasonably open to them, to ensure that adequate systems of internal controls are in place to adequately safeguard the assets of the Group through the prevention and detection of fraud and other irregularities and material misstatements in the financial statements.

The Directors believe that the system of internal control is operating effectively and considered adequate to safeguard the Group business operations, and that the risks taken are at an acceptable level within the context of the business environment of the Group.

The Board is not aware of significant weaknesses in the internal control system that will substantially affect the business operations which could result in material losses to the Group.

Managing Director and Chief Financial Officer Assurance

The Managing Director and the Chief Financial Officer of the Group had provided assurance to the Board that the Group’s risk management and internal control system in all material aspects are operating adequately and effectively.

Compliance

Pursuant to paragraph 15.23 of the Listing Requirements the external auditors have reviewed this statement for inclusion in the Annual Report.

This statement is made in accordance with the Malaysian Code on Corporate Governance 2017, Paragraph 15.26(b) of the Main Market Listing Requirements and Practice Note 9 issued by Bursa Malaysia Securities Berhad. It is also made in accordance with the resolution given by the Board of Directors on 27 March 2018.

ANNUAL REPORT 2017 29 Audit Committee Report

The Board of Directors of TRC Synergy Berhad (“the Board”) is pleased to present the report of the Audit Committee for the financial year ended 31 December 2017.

1. Introduction

The Audit Committee was established by the Board on 22 May 2002 with the primary objective to assist the Board in fulfilling its fiduciary responsibilities particularly relating to business ethics, policies and practices and financial management and control.

2. members of the Audit Committee

The Audit Committee of the Company comprises of the following members. All of them are Independent Non Executive Directors.

Chairman: General (R) Tan Sri Dato’ Seri Mohd Shahrom Bin Dato’ Hj Nordin (Senior Independent Non-Executive Director)

Member: i) noor Zilan bin Mohamed Noor (Independent Non-Executive Director)

ii) abdul Rahman Bin Ali (Independent Non-Executive Director) (Member of the Malaysian Institute of Accountants)

Secretary : Abdul Aziz Bin Mohamed (Company Secretary)

The detailed profiles of the Audit Committee Members can be found on pages 16 to 19.

3. terms of Reference

The terms of reference of the Company’s Audit Committee can be viewed at the Company’s website www.trc.com.my.

4. Summary of Activities of the Audit Committee

During the financial year ended 31 December 2017, the Audit Committee met five times. The details of the attendance of the members of the Audit Committee are as follows:-

No. Audit Committee Attendance 1 General (R) Tan Sri Dato’ Seri Mohd Shahrom Bin Dato’ Hj Nordin (Chairman) 5/5 100% 2 Abdul Rahman Bin Ali 5/5 100% 3 Noor Zilan bin Mohamed Noor 5/5 100%

The Chief Financial Officer, representative of the External Auditors and the Internal Auditors normally attend the meeting. Other senior management may attend the meeting upon invitation. The Audit Committee also meet with the External Auditors and Internal Auditors without executive board members’ and senior management as and when necessary.

30 TRC SYNERGY BERHAD Audit Committee Report (cont’d)

4. Summary of Activities of the Audit Committee (cont’d)

During the financial year, the Audit Committee carried out the following review :-

- The quarterly unaudited financial results and the annual audited financial statements of the Company and Group and make recommendation to the Board of Directors for approval prior to the release of the results and audited financial statements to Bursa Malaysia. The review was to ensure compliance with statutory reporting requirements and appropriate resolution of all accounting and audit matters requiring significant judgment.

- The independence, objectivity and effectiveness of the External Auditors and the services provided including non- audit services and corresponding fees.

- Re-appointment of External Auditors and the audit fees and recommendation to the Board for its approval. The Audit Committee is guided by the policies and procedures for the selection and appointment of external auditors adopted by the Company.

- Measures implemented by management with regard to risk management and internal control.

- The Statement of Corporate Governance and the Statement on Risk Management and Internal Control which area prepared in accordance with the provisions set out under the Malaysian Code on Corporate Governance, the extent of compliance with the said Code and its recommendation to the Board of Directors for inclusion in the Annual Report.

- The annual internal audit plan to ensure adequate scope and comprehensiveness of the activities and coverage on auditable entities with significant high risk.

- The internal audit reports issued by internal auditors and thereafter discuss the management’s actions taken to improve the system of internal control and any outstanding matters.

- Reviewed with the external auditors their audit plan and scope of works for the year and the results of the annual audit, their audit reports and Management Letter together with Management’s responses on the weaknesses highlighted by the external auditors.

The Audit Committee also produced and presented its reports and recommendations to the Board of Directors for inclusion in the Annual Report.

5. internal Audit Function

The Group’s internal audit function is performed by its in house Internal Audit Department in accordance with the annual internal audit plan which had been approved by the Audit Committee and the Board. The Internal Audit Department reports directly to the Audit Committee. The principal function of the Internal Audit Department is to assist Management to evaluate the effectiveness and efficiency of the internal control system and to ensure compliance with the Malaysia Code of Corporate Governance within the business units and projects of the Group. It also ascertains that adequate internal control is maintained to safeguard the assets of the Group and the shareholders interest.

Throughout the financial year, the Internal Audit Department has undertaken several independent audit assignments in accordance with the approved annual audit plan. Details of the activities performed by the Department during the financial year are as follow:-

• Prepared and developed a comprehensive annual audit plan taking into account the Group’s business expansion plan for consideration and approval by Audit Committee and the Board.

• Examined and reviewed the existing control over all significant Group operations and systems to ascertain reasonable assurance that the Group’s objective and goals are met efficiently and economically.

• Conducted operational audit and recommended appropriate control measures for improvement on weaknesses or deficiencies identified.

ANNUAL REPORT 2017 31 Audit Committee Report (cont’d)

5. internal Audit Function (cont’d)

Throughout the financial year, the Internal Audit Department has undertaken several independent audit assignments in accordance with the approved annual audit plan. Details of the activities performed by the Department during the financial year are as follow (cont’d):-

• Reviewed the adequacy of scope, functions, aptitudes and resources of Internal Audit Department deemed necessary to carry out the audit.

• Reviewed the effectiveness of control for procurement and handling of material at all project sites including custodian and utilization of fixed assets within the Group.

• To complement with the Quality Management System in accordance with ISO 9001:2015.

• Continuous follow up of reviews on recommendation and outstanding issues to ensure both are implemented and resolved accordingly.

• Identifying, evaluating and records all relevant risk into the risk registers with remedial actions.

Upon completion of Internal Audit assignment, Internal Audit Department will prepare independent audit reports to the Audit Committee highlighting on risks area, weaknesses identified and the relevant recommendations for their approval. All recommendations shall be reviewed, discussed and communicated accordingly to the Management on rectifying weaknesses identified. The Department also established follow–up reviews to monitor and ensure that the recommendations agreed by the Audit Committee have been effectively implemented.

Going forward the Internal Audit Department will strengthen its capacity and efficiency for the better contribution to the Group pursuant to the Audit Charter and Internal Audit Plan which had been approved by the Audit Committee and the Board.

Total cost incurred for the Internal Audit Department for the financial year ended 31 December 2017 was RM246,000.

32 TRC SYNERGY BERHAD Financial Statements and Reports

034 Directors’ Report 039 Statement by Directors and Statutory Declaration 040 Independent Auditors’ Report 044 Statements of Profit or Loss and Other Comprehensive Income 045 Consolidated Statements of Financial Position 046 Company Statements of Financial Position 047 Statements of Changes in Equity - Group 049 Statements of Changes in Equity - Company 050 Consolidated Statements of Cash Flows 052 Company Statements of Cash Flows 055 Notes to Financial Statements Directors’ Report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2017.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding, general contractors for supplying labour and provision of corporate, administrative and financial support services to its subsidiaries.

The principal activities of the subsidiaries are as disclosed in Note 17 to the financial statements.

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

RESULTS Group Company RM RM

Profit net of tax 29,754,782 16,250,133

Profit attributable to : Equity holders of the Company 30,207,261 16,250,133 Non-controlling interests (452,479) -

29,754,782 16,250,133

RESERVES AND PROVISIONS

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

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

DIVIDENDS

The amount of dividend paid by the Company during the year in respect of the financial year ended 31 December 2016, was as follows :

RM First and final single tier dividend of 1.90 sen per share, on 480,497,103 ordinary shares, paid on 16 June 2017. 9,129,445

At the forthcoming Annual General Meeting, a provisional single tier dividend in respect of the financial year ended 31 December 2017, of 2.80 sen per share on 480,497,103 ordinary shares amounting to a dividend payable of RM13,453,919 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2018.

34 TRC SYNERGY BERHAD Directors’ Report (cont’d)

DIRECTORS OF THE COMPANY

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

Tun Jeanne Binti Abdullah (Appointed on 1 December 2017) Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin Dato’ Abdul Aziz Bin Mohamad Gen. (R) Tan Sri Dato’ Seri Mohd Shahrom Bin Dato’ Hj Nordin Dato’ AR. Nur Haizi Binti Abdul Hai Abdul Rahman Bin Ali Noor Zilan Bin Mohamed Noor Siti Sarlina Binti Abdul Rahman (alternate director to Dato’ Abdul Aziz Bin Mohamad)

DIRECTORS OF SUBSIDIARIES

The following is a list of directors of the subsidiaries (excluding directors who are also directors of the Company) in office during the financial year until the date of this report :

Dato’ Rosli Bin Mohamed Nor Abdul Aziz Bin Mohamed Dato’ Richard Khoo Teng San Swee Chin Yu Pehin Orang Kaya Seri Dewa Major General (B) Dato Seri Pahlawan Haji Mohammad Bin Haji Daud Datuk (Dr) Ting Ding Ing Ir. Peter Wong Hung Huang Loh Leh Wong Azizul Qahar Bin Abdullah Lu Yew Hee Tan Khoon Kian Ren Bin Qing

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than the benefits shown under Directors’ Remuneration in Note 10 to the financial statements) by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

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

ANNUAL REPORT 2017 35 Directors’ Report (cont’d)

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings required to be kept under Section 59 of the Companies Act, 2016, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows :

|------Number of Ordinary Shares ------| At At The Company 1.1.2017 Acquired Sold 31.12.2017

Direct Interest : Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin 47,531,517 - - 47,531,517 Dato’ Abdul Aziz Bin Mohamad 13,658,217 - - 13,658,217

Deemed Interest : Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin # 118,075,200 - - 118,075,200 Dato’ Abdul Aziz Bin Mohamad # 118,075,200 - - 118,075,200

# Deemed interested by virtue of their substantial shareholdings in TRC Capital Sdn. Bhd. and Kolektif Aman Sdn. Bhd.

|------Number of Warrants A (2007/2017) ------| At At The Company 1.1.2017 Acquired Exercised Expired 31.12.2017

Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin 12,114,237 - - (12,114,237) - Dato’ Abdul Aziz Bin Mohamad 1,149,000 - - (1,149,000) -

Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin and Dato’ Abdul Aziz Bin Mohamad by virtue of their interest in shares in the Company are also deemed interested in shares of all the Company’s subsidiaries to the extend the Company has an interest.

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

WARRANTS A 2007/2017

A total of 30,800,000 free warrants were issued by the Company in conjunction with the Rights Issue in 2007. Each warrant is convertible into one new ordinary share of RM1.00 each at the exercise price of RM1.00 per ordinary share.

Consequential to the Bonus Issue in 2008, the Company had issued an additional 6,101,520 new Warrants 2007/2017 pursuant to the adjustments in accordance with the provision under the Deed Poll executed by the Company on 15 November 2006 constituting the Warrants (“Deed Poll”). No Warrants A were exercised during the financial year and the warrants has expired on 21 January 2017.

TREASURY SHARES

The Board obtained shareholders’ approval to undertake the purchase of up to 10% of the issued and paid up share capital of the Company. The shareholders of the Company, by a special resolution passed in a general meeting held on 24 May 2017, renewed their approval for the Company’s plan to repurchase its own ordinary shares. The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

36 TRC SYNERGY BERHAD Directors’ Report (cont’d)

DIRECTORS’ REMUNERATION

Details of directors’ remuneration are set out in Note 10 to the financial statements.

INDEMNIFYING DIRECTORS, OFFICERS OR AUDITORS

During the financial year, the total amount of indemnity coverage and insurance premium paid for the Directors and the officers are as follows :-

Group Company RM RM

Insurance coverage 34,848,000 16,968,000

Insurance premium 115,624 53,032

OTHER STATUTORY INFORMATION

(a) Before the statements of profit or loss and other comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

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

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

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

(i) the amount written off for bad debts or the amount of the allowance for doubtful debts inadequate to any substantial extent; and

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

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

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

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

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

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year, except as disclosed in Note 35 to the financial statements.

ANNUAL REPORT 2017 37 Directors’ Report (cont’d)

OTHER STATUTORY INFORMATION (cont’d)

(f) In the opinion of the directors:

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

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

SUBSIDIARIES

Details of subsidiaries are set out in Note 17 to the financial statements.

AUDITORS’ REMUNERATION

Details of auditors’ remuneration are set out in Note 8 to the financial statements.

SIGNIFICANT EVENTS

The significant events are disclosed in Note 40 to the financial statements.

AUDITORS

The auditors, AljeffriDean, have indicated their willingness to accept re-appointment as auditors.

The report was approved by the Board of Directors on 27 March 2018.

Signed on behalf of the Board in accordance with a resolution of the Directors,

TAN SRI DATO’ SRI SUFRI BIN HJ MOHD ZIN

DATO’ ABDUL AZIZ BIN MOHAMAD

38 TRC SYNERGY BERHAD Statement by Directors Pursuant to Section 251 (2) of the Companies Act, 2016

We, TAN SRI DATO’ SRI SUFRI BIN HJ MOHD ZIN and DATO’ ABDUL AZIZ BIN MOHAMAD, being two of the directors of TRC SYNERGY BERHAD, state that in the opinion of the Directors, the accompanying financial statements set out on pages 44 to 127 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirement of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of the financial performance and cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the Directors,

TAN SRI DATO’ SRI SUFRI BIN HJ MOHD ZIN DATO’ ABDUL AZIZ BIN MOHAMAD

Kuala Lumpur, Malaysia. Date : 27 March 2018

Statutory Declaration Pursuant to Section 251 (1) (B) of the Companies Act, 2016

I, YEOH SOOK KENG, being the officer primarily responsible for the financial management of TRC SYNERGY BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 44 to 127 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, l960.

Subscribed and solemnly declared by the abovenamed YEOH SOOK KENG at Kuala Lumpur in the Federal Territory on 27 March 2018 YEOH SOOK KENG

Before me,

SITHAMBARAM A/L PITCHAY PILLAI (NO.W747) Commissioner for Oath

ANNUAL REPORT 2017 39 Independent Auditors’ Report to the members of TRC Synergy Berhad

Report on the Financial Statements

Opinion

We have audited the financial statements of TRC Synergy Berhad, which comprise the statement of financial position as at 31 December 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 44 to 127.

In our opinion, the financial statements have been properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2017 and of their financial performance and cash flows for the year then ended.

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 Responsibilities

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial 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.

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatements of the financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis of our audit opinion on the accompanying financial statements.

(i) Recognition of contract revenue and expenses

The Group’s revenue and profits are derived mainly from long term construction contracts as disclosed in Note 3, Note 4 and Note 24 to the financial statements.

We have identified this area due to the amounts involved are significant and material to the overall results of the Group. The Group uses the stage of completion method which requires the management to exercise significant judgement and estimation in determining the stage of completion and in estimating total contract costs. Hence, there is a risk that the actual contract costs are different to those estimate resulting in material variance in the profit or loss recognised to date and in the current financial year.

The measurement of contract revenue would usually affected by a variety of uncertainties that depend on the outcome of future events. Revision on the estimated approved variation orders may increase or decrease the contract revenue from one accounting period to another. In estimating the contract cost, there will be risk of variation from estimate due to future cost escalation and contingencies during the execution of the contract.

40 TRC SYNERGY BERHAD Independent Auditors’ Report to the members of TRC Synergy Berhad (cont’d)

Key Audit Matters (Cont’d)

(i) Recognition of contract revenue and expenses (cont’d)

In addressing this area, our audit procedures included the following :

(a) Tested the Group’s control, relating to contract cost and revenue by checking for evidence of reviews and approval over estimated total budgeted costs and authorising and recording of actual cost incurred for individual project undertaken by the Group;

(b) Compared certified progress claim certificate from customer against the stage of completion of on going projects to assess the reasonableness of the percentage of completion recognised in the profit and loss;

(c) Reviewed the assumptions in deriving at the estimated total contract costs. This procedure includes comparing the historical accuracy of the Group’s budgeted profit margin achieved on previous similar projects to estimates; and

(d) Inspected a sample of documentation on the costs incurred to date/or progress claim, to ensure that the costs were properly allocated to the appropriate projects.

(ii) impairment of loans and advances to foreign subsidiaries

The Group and the Company carry long outstanding receivables from foreign subsidiaries as disclosed in Note 17 and 20 to the financial statements. The assessment of recoverability of the loans and advances involved judgements and estimation in analysing subsidiary payment terms, current economic trends and cash flow projections.

In addressing this area, our audit procedures included, among others :

a) Making inquiries of management regarding the action plans to recover the amounts.

b) Reviewing the comparison of the net carrying amount of the interest in subsidiary with net assets as at year end.

c) Examining other evidence including repayment schedules, proposed or existing settlement plans and other related correspondences.

d) Evaluating the reasonableness and adequacy of making allowances for impairment.

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 does not include 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 the other 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 annual report 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.

ANNUAL REPORT 2017 41 Independent Auditors’ Report to the members of TRC Synergy Berhad (cont’d)

Responsibilities of the Directors for the Financial Statements

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

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 the 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 and 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 of the Group and of the Company 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.

42 TRC SYNERGY BERHAD Independent Auditors’ Report to the members of TRC Synergy Berhad (cont’d)

Auditors’ Responsibilities for the Audit of the Financial Statements (cont’d)

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

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

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

Report On Other Legal And Regulatory Requirements

In accordance with the requirements of the Companies Act, 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 17 to the financial statements.

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.

AljeffriDean Zuhairi Bin Dziaruddin A.F. No. 1366 No : 3145/06/18 (J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia Date : 27 March 2018

ANNUAL REPORT 2017 43 Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2017

Group Company Note 2017 2016 2017 2016 RM RM RM RM

Revenue 3 728,180,247 753,840,515 28,521,482 7,980,429 Cost of sales 4 (649,707,469) (697,850,266) (5,384,109) (4,259,252) Gross profit 78,472,778 55,990,249 23,137,373 3,721,177

Other income 5 12,560,073 7,910,555 793,368 3,734,958 Administrative expenses (50,425,752) (34,364,800) (12,268,812) (9,902,482) Operating profit/(loss) 40,607,099 29,536,004 11,661,929 (2,446,347)

Finance income 6 6,512,328 6,341,323 4,672,546 2,915,828 Finance costs 7 (4,917,890) (5,338,335) (5,367) (4,548) Share of profit of associates 4,736,105 2,204,057 - - Profit before tax 8 46,937,642 32,743,049 16,329,108 464,933

Income tax expense 11 (17,182,860) (4,861,999) (78,975) 4,637

Profit net of tax 29,754,782 27,881,050 16,250,133 469,570

Other comprehensive income/(loss), net of tax:

Items that are or may be reclassified subsequently to profit or loss:

Foreign currency translation differences for foreign operations (101,898) (369,698) - - (101,898) (369,698) - -

Other comprehensive loss for the year, net of tax (101,898) (369,698) - - Total comprehensive income for the year 29,652,884 27,511,352 16,250,133 469,570

Profit attributable to:

Equity holders of the Company 30,207,261 27,864,422 16,250,133 469,570 Non - controlling interests (452,479) 16,628 - - Profit for the year 29,754,782 27,881,050 16,250,133 469,570

Total comprehensive income attributable to:

Equity holders of the Company 30,108,749 27,492,404 16,250,133 469,570 Non-controlling interests (455,865) 18,948 - - Total comprehensive income for the year 29,652,884 27,511,352 16,250,133 469,570

Earnings per share attributable to equity holders of the Company (sen)

- Basic 12 6.29 5.80 - Diluted 12 6.29 5.80

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

44 TRC SYNERGY BERHAD Consolidated Statement of Financial Position as at 31 December 2017

2017 2016 Note RM RM

ASSETS

NON-CURRENT ASSETS

Investment properties 13 24,341,891 24,341,891 Property, plant and equipment 14 82,553,841 47,081,830 Properties held for development 15 12,068,603 51,388,319 Intangible assets 16 - 9,177 Investment in Subsidiaries 17 - - Investment in Associates 18 13,759,091 10,771,113 Other investments 19 32,034,271 29,193,952 Other receivables 20 - - Deferred tax assets 21 403,540 2,542,033 165,161,237 165,328,315

CURRENT ASSETS

Property development costs 15 68,518,258 104,928,485 Inventories 22 19,408,429 474,584 Trade and other receivables 20 300,715,443 267,084,934 Other current assets 24 42,637,359 55,734,062 Cash and bank balances 25 220,433,094 233,820,288 651,712,583 662,042,353

TOTAL ASSETS 816,873,820 827,370,668

EQUITY AND LIABILITIES

EQUITY

Share capital 26 240,456,670 240,248,552 Share premium 26 - 208,118 Other reserves 27 2,226,943 2,325,455 Retained earnings 28 158,805,202 137,727,386 Equity attributable to equity holders of the Company 401,488,815 380,509,511 Non-controlling interests 4,527,767 4,983,632 Total equity 406,016,582 385,493,143

NON-CURRENT LIABILITIES

Borrowings 29 6,186,072 3,158,607 Deferred tax liabilities 21 1,640,694 2,349,564 7,826,766 5,508,171 CURRENT LIABILITIES

Borrowings 29 96,420,682 168,340,096 Trade and other payables 30 241,405,602 205,901,736 Other current liabilities 31 58,988,289 60,709,733 Taxation 6,215,899 1,417,789 403,030,472 436,369,354

Total liabilities 410,857,238 441,877,525 TOTAL EQUITY AND LIABILITIES 816,873,820 827,370,668

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

ANNUAL REPORT 2017 45 Company Statement of Financial Position as at 31 December 2017

2017 2016 Note RM RM

ASSETS

NON-CURRENT ASSETS

Investment properties 13 - - Property, plant and equipment 14 851,738 1,250,981 Properties held for development 15 - - Intangible assets 16 - - Investment in Subsidiaries 17 106,874,969 106,211,096 Investment in Associates 18 - - Other investments 19 - - Other receivables 20 158,026,484 151,814,204 Deferred tax assets 21 231,313 181,661 265,984,504 259,457,942

CURRENT ASSETS

Property development costs 15 - - Inventories 22 - - Trade and other receivables 20 413,334 593,628 Other current assets 24 - - Cash and bank balances 25 7,058,717 6,796,525 7,472,051 7,390,153

TOTAL ASSETS 273,456,555 266,848,095

EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company

Share capital 26 240,456,670 240,248,552 Share premium 26 - 208,118 Other reserves 27 - - Retained earnings 28 31,384,274 24,263,586 Total equity 271,840,944 264,720,256

NON-CURRENT LIABILITIES

Borrowings 29 - - Deferred tax liabilities 21 - - - - CURRENT LIABILITIES

Borrowings 29 - - Trade and other payables 30 1,615,611 2,127,839 Other current liabilities 31 - - Taxation - - 1,615,611 2,127,839

Total liabilities 1,615,611 2,127,839 TOTAL EQUITY AND LIABILITIES 273,456,555 266,848,095

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

46 TRC SYNERGY BERHAD otal R M quity T E - (101,898) (9,129,445) 29,754,782 29,652,884 385,493,143 406,016,582 on R M N (3,386) - - (455,865) (452,479) I nterests ontrolling 4,983,632 4,527,767 C otal R M T (98,512) - (9,129,445) 30,207,261 30,108,749 380,509,511 401,488,815 R M ote 28) - - ( N E arnings Retained Retained (9,129,445) 30,207,261 30,207,261 137,727,386 158,805,202 ompany ------| ompany Distributable R M O ther ote 27) (98,512) (98,512) - - - ( N Reserves Reserves 2,325,455 2,226,943 quity Holders of the C quity Holders R M Share ote 26) - - - - 208,118 - ( N (208,118) Premium ttributable to E on-Distributable ------| R M Share ote 26) C apital - - - - 208,118 ( N 240,248,552 240,456,670 ote 34 N |------N |------A for foreign operations foreign for t 1 January 2017 t 31 December 2017 t 31 December otal comprehensive income for the year the year for income otal comprehensive A of effect for Adjustment 2016 Act Companies Dividends translation difference currency Foreign the year for income O ther comprehensive the year for Profit T A Statement of Changes in Equity - Group for the year ended 31 December 2017

ANNUAL REPORT 2017 47 49 otal R M quity T E - (369,698) 4,897,742 (3,123,231) 27,881,050 27,511,352 356,207,231 385,493,143 on R M N 2,320 66,942 18,948 16,628 - - - I nterests ontrolling 4,897,742 4,983,632 C 49 otal R M T - - (372,018) (3,123,231) 27,864,422 27,492,404 356,140,289 380,509,511 R M ote 28) - - - - ( N E arnings Retained Retained (3,123,231) 27,864,422 27,864,422 112,986,195 137,727,386 ompany ------| ompany Distributable R M O ther ote 27) - - - - - ( N (372,018) (372,018) Reserves Reserves 2,697,473 2,325,455 quity Holders of the C quity Holders 9 R M Share ote 26) ------208,109 ( N 208,118 Premium ttributable to E on-Distributable ------| 40 R M Share ote 26) C apital ------( N 240,248,512 240,248,552 ote 34 N |------N |------A for foreign operations foreign for t 1 January 2016 t 31 December 2016 t 31 December otal comprehensive income for the year the year for income otal comprehensive A A Warrants B Warrants Dividends Issuance of shares to non controlling interest to non controlling of shares Issuance translation difference currency Foreign T ther comprehensive income for the year for income O ther comprehensive the year for Profit A Statement of Changes in Equity - Group for the year ended 31 December 2017 (cont’d) part of the financial statements. an integral form notes The accompanying

48 TRC SYNERGY BERHAD Statement of Changes in Equity - Company for the year ended 31 December 2017

|------Non - distributable ------| Distributable Share Share Retained Total Capital Premium Earnings Equity RM RM RM RM Note (Note 26) (Note 26) (Note 28)

At 1 January 2017 240,248,552 208,118 24,263,586 264,720,256

Adjustment for effect of Companies Act 2016 208,118 (208,118) - - Total comprehensive income - - 16,250,133 16,250,133 Dividends 34 - - (9,129,445) (9,129,445) At 31 December 2017 240,456,670 - 31,384,274 271,840,944

At 1 January 2016 240,248,512 208,109 26,917,247 267,373,868 Total comprehensive income - - 469,570 469,570 Dividends 34 - - (3,123,231) (3,123,231) Issue of ordinary shares pursuant to: Warrants A - - - - Warrants B 40 9 - 49 At 31 December 2016 240,248,552 208,118 24,263,586 264,720,256

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

ANNUAL REPORT 2017 49 Consolidated Statement of Cash Flows for the year ended 31 December 2017

Note 2017 2016 RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 46,937,642 32,743,049

Adjustments for:-

Allowance for doubtful debts 4,650,496 70,976 Gain on disposal of a subsidiary company - (438,305) Gain on disposal of land held for development and property development costs (4,397,505) - Unrealised loss/(gain) on foreign exchange 6,268,298 (5,005,719) Unrealised foreign exchange difference arising due to retranslation of financial statements in foreign currency (457,311) (2,337,135) Depreciation of property, plant and equipment 11,205,765 13,091,816 Amortisation of leasehold land 5,891 5,891 Gain on disposal of property, plant and equipment (2,942,725) (1,129,503) Share of results of associates (4,736,105) (2,204,057) Interest expense 11,520,949 9,527,268 Interest income (6,512,328) (6,341,323) Property, plant and equipment written off 36,835 176,102 Distribution of profit from partnership (3,480,874) (383,187) Impairment of investment in associate 1,035,000 - Goodwill written off 9,177 -

Operating profit before working capital changes 59,143,205 37,775,873

Inventories (527,629) (2,981) Receivables (34,224,535) 45,268,089 Payables 33,782,422 31,138,704 Property development project costs (5,251,936) (39,603,132) Cash generated from operations 52,921,527 74,576,553

Taxation paid (8,771,073) (8,043,908) Tax refund 804,422 1,202,094 Interest paid (11,520,949) (9,527,268) Interest received 6,512,328 6,341,323

Net cash generated from operating activities 39,946,255 64,548,794

50 TRC SYNERGY BERHAD Consolidated Statement of Cash Flows for the year ended 31 December 2017 (cont’d)

Note 2017 2016 RM RM

CASH FLOWS FROM INVESTING ACTIVITIES

Associate company 965,606 (955,216) Proceeds from disposal of land held for development and property development costs 32,368,331 - Purchase of property, plant and equipment 33 (6,720,094) (2,732,150) Proceeds from disposal of property, plant and equipment 5,998,841 1,974,179 Net cash inflow from acquisition of a subsidiary company 17 - 1,514,461 Net cash outflow from disposal of a subsidiary company 17 - (547,358) Net cash generated from/(used in) investing activities 32,612,684 (746,084)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds on share premium from warrants exercised - 9 Proceeds from warrants exercised - 40 Fixed deposits (5,924,713) (20,978,200) Repayment of short term borrowings (77,931,764) (3,180,870) Repayment of long term borrowings (3,716,716) (9,766,873) Dividend paid (9,129,445) (3,123,231) Net cash used in financing activities (96,702,638) (37,049,125)

Net (decrease)/increase in cash and cash equivalents (24,143,699) 26,753,585 Effects of foreign exchange rate changes (16,466) 86,345 Cash and cash equivalents at the beginning of the year 79,912,162 53,072,232 Cash and cash equivalents at the end of the year 25 55,751,997 79,912,162

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

ANNUAL REPORT 2017 51 Company Statement of Cash Flows for the year ended 31 December 2017

Note 2017 2016 RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 16,329,108 464,933

Adjustments for:-

Unrealised loss/(gain) on foreign exchange 2,027,703 (2,941,590) Depreciation of property, plant and equipment 399,243 399,757 Dividend income (20,000,000) - Interest income (4,672,546) (2,915,828)

Operating loss before working capital changes (5,916,492) (4,992,728)

Receivables (247) (3,110) Payables (512,228) 876,771 Cash used in operations (6,428,967) (4,119,067) Taxation paid (56,664) (113,328) Tax refund 108,578 396,664 Interest received 4,672,546 2,915,828

Net cash used in operating activities (1,704,507) (919,903)

CASH FLOWS FROM INVESTING ACTIVITIES

Dividend received 20,000,000 - Additional investment in subsidiaries (663,873) (1,286,477) Other receivables (8,239,978) 5,237,285 Net cash generated from investing activities 11,096,149 3,950,808

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds on share premium from warrants exercised - 9 Proceeds from Warrants exercised - 40 Fixed deposits (167,735) (171,083) Dividend paid (9,129,445) (3,123,231) Net cash used in financing activities (9,297,180) (3,294,265)

Net increase/(decrease) in cash and cash equivalents 94,462 (263,360) Effects of foreign exchange rate changes (5) 65 Cash and cash equivalents at the beginning of the year 1,121,222 1,384,517 Cash and cash equivalents at the end of the year 25 1,215,679 1,121,222

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

52 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017

1. coRPORATE INFORMATION

The principal activities of the Company are investment holding, general contractors for supplying labour and provision of corporate, administrative and financial support services to its subsidiaries. The principal activities of the subsidiaries are disclosed in Note 17 to the financial statements.

The number of employees of the Company as at year end is 62 (2016: 62). The number of employees of the Group as at year end is 735 (2016 : 743).

The Company is a public limited liability company, incorporated and domiciled in Malaysia.

The Company is listed on the Main Market of Bursa Malaysia Securities Berhad and produces financial statements available for the public use.

The registered office and principal place of business of the Company is located at TRC Business Centre, Jalan Andaman Utama, 68000 Ampang, Selangor Darul Ehsan.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 27 March 2018.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the Companies Act, 2016 in Malaysia.

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM) which is the Company’s functional currency.

2.2 Statement of Compliance

(a) adoption of Amendments to MFRSs and IC Interpretation

The accounting policies adopted by the Group and the Company are consistent with those adopted in the previous year, except as follows :-

* Amendments to MFRS 12, Disclosure of Interest in Other Entities - (Annual improvements to MFRS Standards 2014-2016 Cycle)

* Amendments to MFRS 107, Statement of Cash Flows - Disclosure Initiative

* Amendments to MFRS 112, Income Taxes - Recognition of Deferred Tax Assets for Unrealised Losses

The adoption of the above pronouncements do not have any material impact on the financial statements of the Group and the Company.

(b) Standards issued but not yet effective

The following are accounting standards, amendments and interpretations of the MFRS framework that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company.

ANNUAL REPORT 2017 53 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.2 Statement of Compliance (cont’d)

(b) Standards issued but not yet effective (cont’d)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018

* MFRS 9, Financial Instruments (2014)

* IC Interpretation 22, Foreign Currency Transactions and Advance Consideration

* Amendments to MFRS 1, First-time Adoption of Financial Reporting Standards (Annual Improvements to MFRS Standards 2014-2016 Cycle)

* Amendments to MFRS 2, Share-based Payment - Classification and Measurement of Share-based Payment Transactions

* Amendments to MFRS 4, Insurance Contracts - Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts

* MFRS 15, Revenue from Contracts with Customers

* Amendments to MFRS 15, Clarifications to MFRS 15 Revenue from Contracts with Customers

* Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual Improvements to MFRS Standards 2014-2016 Cycle)

* Amendments to MFRS 140, Investments Property - Transfers of Investment Property

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019

* Amendments to MFRS 3, Business Combination (Annual Improvements to MFRS Standards 2015-2017 Cycle)

* Amendments to MFRS 9, Financial Instruments - Prepayment Features with Negative Compensation

* Amendments to MFRS 11, Joint Arrangements (Annual Improvements to MFRSs 2015-2017 Cycle)

* MFRS 16, Leases

* Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRSs 2015-2017 Cycle)

* Amendments to MFRS 123, Borrowing Costs (Annual Improvements to MFRSs 2015-2017 Cycle)

* Amendments to MFRS 128, Investment in Associates and Joint Ventures - Long-term Interests in Associates and Joint Ventures

* IC Interpretation 23 Uncertainty over Income Tax Treatments

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021

* MFRS 17, Insurance Contracts

54 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.2 Statement of Compliance (cont’d)

(b) Standards issued but not yet effective (cont’d)

Effective date of these Standards have been deferred, and yet to be announced

* Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The initial application of the abovementioned accounting standards, amendments and interpretations are not expected to have any material impacts to the financial statements of the Group and the Company except as mentioned below:

MFRS 15, Revenue from Contracts with Customers

MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue - Barter Transactions Involving Advertising Services. MFRS 15 provides a single model for accounting for revenue arising from contracts with customers, focusing on the identification and satisfaction of performance obligations.

mFRS 9, Financial Instruments

MFRS 9 contains new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. MFRS 9 also introduces a new impairment model with a forward-looking expected credit loss (ECL) model.

mFRS 16, Leases

MFRS 16 introduces a single accounting model for lessee and eliminates the distinction between finance lease and operating lease. Lessee is now required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Upon adoption of MFRS 16, the Company is required to account for major part of its operating leases in the statement of financial position by recognising the ‘right-of-use’ assets and the lease liability, thus increasing the assets and liabilities of the Company.

The Group is currently assessing the financial impact of these Standards and plan to adopt these Standards on the required effective date.

2.3 Summary of Significant Accounting Policies

(a) Basis of Consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

The Group controls an entity when;

* the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

ANNUAL REPORT 2017 55 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(a) Basis of Consolidation (cont’d)

(i) Subsidiaries (cont’d)

* Potential voting rights are considered when assessing control only when such rights are substantive.

* The Group considers it has de facto power over an investee when, despite not having the majority of voting rights, its has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses. The cost of investments includes transaction costs.

The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Group.

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

For new acquisition, the Group measures the cost of goodwill at the acquisition date as :

* the fair value of the consideration transferred; plus

* the recognised amount of any non-controlling interests in the acquiree; plus

* if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less

* the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the exceed is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

(iii) Accounting for acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any differences between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

56 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(a) Basis of Consolidation (cont’d)

(iii) Accounting for acquisitions of non-controlling interests (cont’d)

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity and resulting gain/loss is recognised directly in equity.

(iv) Loss of control

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

(v) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(vii) Joint arrangements

Joint arrangements are arrangements of which the group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.

ANNUAL REPORT 2017 57 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(a) Basis of Consolidation (cont’d)

(vii) Joint arrangements (cont’d)

Joint arrangements are classified and accounted for as follows:

* A joint arrangement is classified as “joint operation” when the Group or the Company has rights to the assets and obligations for the liabilities relating to an arrangement. The Group and the Company account for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint operation.

* A joint arrangement is classified as “joint venture” when the Group has rights only to the net assets of the arrangements. The Group accounts for its interest in the joint venture using the equity method. Investments in joint venture are measured in the Group’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

(viii) Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associates, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.

When the Group’s interest in an associate decrease but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

58 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(a) Basis of Consolidation (cont’d)

(viii) Associates (cont’d)

The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

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

(b) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit be impaired, by comparing the carrying amount of the cash- generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed off, the goodwill associated with the operation disposed off is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed off in this circumstance is measured based on the relative fair values of the operations disposed off and the portion of the cash-generating unit retained.

(c) inventories

Inventories are stated at lower of cost and net realisable value.

Cost is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The costs of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity. The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.

Net realisable value represents the estimated selling price in the ordinary course of business, less all estimated costs of completion and applicable variable selling expenses. In arriving at the net realisable value, due allowances is made for all obsolete and slow moving items.

(d) Property, Plant and Equipment and Depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

ANNUAL REPORT 2017 59 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(d) Property, Plant and Equipment and Depreciation (cont’d)

Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The policy for recognition and measurement of impairment losses is in accordance with No. 2.3 (i).

Certain freehold and leasehold land and buildings are stated at revalued amount, which is the fair value at the date of the revaluation less any accumulated impairment losses. Fair value is determined from market-based evidence by appraisal that is undertaken by professionally qualified valuers. Revaluations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the statement of financial position date. Any revaluation surplus is credited to the revaluation reserve included within equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss to the extent of the decrease previously recognised. A revaluation deficit is first offset against unutilised previously recognised revaluation surplus in respect of the same asset and the balance is thereafter recognised in profit or loss. Upon disposal or retirement of an asset, any revaluation reserve relating to the particular asset is transferred directly to retained earnings.

Freehold land is not depreciated as it has an infinite life. Leasehold land is amortised over the maximum period of 83 to 99 years. Building under construction are not depreciated as these assets are not yet available for use. Other property, plant and equipment are depreciated on a straight line basis to write off the cost of the assets to their residual values over their estimated useful lives, at the following annual rates:

Renovation - 10% Buildings - 2% Plant, machinery and tools - 10% Furniture and fittings - 10% Motor vehicles - 20% Office equipment and computers - 20% Telecommunication equipment - 20%

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses on disposal are determined by comparing the proceeds with the carrying amount of the related asset and are included in the profit or loss.

(e) Leases

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings.

In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

60 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(e) Leases (cont’d)

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.3(d).

(f) investment Properties

(i) investment property carried at fair value

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

Investment properties are measured initially at cost and subsequently at fair value with any change therein recognised in profit or loss for the period in which they arise. Where the fair value of the investment property under construction is not reliably determinable, the investment property under construction is measured at cost until either its fair value becomes reliably determinable or construction is complete, whichever is earlier.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowings costs.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.

(ii) Reclassification to/from investment property

When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in profit or loss. Upon disposal of an investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through profit or loss.

When the use of a property changes such that it is reclassified as property, plant and equipment or inventories, its fair value at the date reclassification becomes its cost for subsequent accounting.

(g) Foreign Currencies

(i) Functional and Presentation Currency

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

ANNUAL REPORT 2017 61 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(g) Foreign Currencies (cont’d)

(ii) Foreign Currency Transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each statement of financial position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the statement of financial position date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s and the Company’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s and the Company’s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group’s and the Company’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Group’s and the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Group’s and the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

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

The principal exchange rates for every unit of foreign currency ruling at statement of financial position date are as follows :-

2017 2016 RM RM

United States Dollar 4.06 4.49 Euro Dollar - 4.72 Australian Dollar 3.17 3.23 Brunei Dollar 3.04 3.09 Singapore Dollar 3.04 3.10

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

62 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(h) Borrowing Costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceased when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(i) impairment of non - financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the assets’s recoverable amount.

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

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

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

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

(j) Financial Assets

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

ANNUAL REPORT 2017 63 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(j) Financial Assets (cont’d)

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

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

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

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives), contingent consideration in a business combination, or financial assets acquired principally for the purpose of selling in the near term.

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

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

(ii) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

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

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

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

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

64 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(k) impairment of financial assets

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

(i) trade and other receivables and other financial assets carried at amortised cost

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

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

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

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(ii) unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(l) cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdraft that form an integral part of the Group’s cash management.

(m) construction Contract

Where the outcome of a contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

ANNUAL REPORT 2017 65 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(m) construction Contract (cont’d)

Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.

(n) Land Held For Property Development and Property Development Costs

(i) Land Held For Property Development

Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses, if any.

Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

(ii) Property Development Costs

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

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

Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred.

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

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

66 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(n) Land Held For Property Development and Property Development Costs (cont’d)

(ii) Property Development Costs (cont’d)

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

(o) Financial Liabilities

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

Financial liabilities, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

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

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

(ii) other financial liabilities

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

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

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

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

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

ANNUAL REPORT 2017 67 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(p) equity Instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

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

(q) Warrants

Issue of ordinary shares upon exercise of the warrant are treated as new subscription of ordinary shares for the consideration equivalent to the exercise price of the warrants.

(r) Provision for Liabilities

Provision for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each statement of financial position date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. Provision are discounted using a current pre-tax rate that reflects, where appropriate the risks specific to the liability. When discounting is used, the increase in provision due to passage of time is recognised as finance cost.

(s) Employee Benefits

(i) Short term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

The Company’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(t) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

68 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(t) Revenue (cont’d)

(ii) Construction contracts

Revenue from construction contracts is accounted for using the stage of completion method as described in Note 2.3(m).

(iii) Sale of development properties

Revenue from sale of properties is accounted for using the stage of completion method as described in Note 2.3(n)(ii).

(iv) Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at effective interest rate applicable, which is the rate that exactly discount estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

(v) Rental income

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

(vi) Dividend income

Dividend income is recognised when the right to receive payment is established.

(vii) Management fees

Management fees are recognised when services are rendered.

(viii) Rendering of services

Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the end of the reporting period. The stage of completion is assessed by reference to surveys of work performed.

(u) Income Taxes

(i) Current tax

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

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(ii) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

ANNUAL REPORT 2017 69 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(u) Income Taxes (cont’d)

(ii) Deferred tax (cont’d)

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

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

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

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

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

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

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

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

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

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

(iii) Good and Services Tax (“GST”)

The net amount of GST being the difference between output and input of GST, payable to or receivable from the respective authorities at the reporting date, is included in trade and other payables or trade and other receivables in the statements of financial position.

70 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(v) Contingencies

(i) contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(ii) contingent assets

When an inflow of economic benefit of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statements of financial position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised.

(w) Financial Guarantee Contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

As at reporting date, no values are placed on corporate guarantees provided by the Group to secure bank loans and other banking facilities granted to its subsidiaries where such loans and banking facilities are fully collateralised by fixed and floating charges over the property, plant and equipment and other assets of the subsidiaries and where the directors regard the value of the credit enhancement provided by the corporate guarantees is minimal.

(x) Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group.

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

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

ANNUAL REPORT 2017 71 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Summary of Significant Accounting Policies (cont’d)

(x) Fair Value Measurements (cont’d)

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

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

(y) earning Per Ordinary Share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes.

(z) operating Segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

(zi) offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.4 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on historical experience and other relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

72 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.4 Significant Accounting Estimates and Judgements (cont’d)

The key assumptions concerning the future and other key source of estimation or uncertainty at the date of statement of financial position, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below.

(i) Depreciation of property, plant and equipment

The Group and the Company estimates the useful lives of property, plant and equipment based on the period over which the assets are expected to be available for use. The estimated useful lives of property, plant and equipment are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of property, plant and equipment are based on the internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timings of recorded expenses for any period would be affected by changes in these factors and circumstance. A reduction in the estimated useful lives of the property, plant and equipment would increase the recorded expenses and decrease the non-current assets. The carrying amounts of the Group’s and of the Company’s property, plant and equipment at 31 December 2017 are disclosed in Note 14 to the financial statements.

(ii) estimation of fair value of properties

In the absence of current prices in an active market for similar properties, the Group considers information from a variety of sources, including :

(a) current prices in an active market for properties of a different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect differences; or

(b) recent prices of similar properties based on less active market, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices.

(iii) impairment of goodwill on consolidation

The Group determines whether goodwill is impaired at least on an annual basis, in accordance with the accounting policy disclosed in Note 2.3(i). This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group’s goodwill on consolidation at 31 December 2017 is disclosed in Note 16 to the financial statements.

(iv) income taxes/Deferred tax liabilities

Significant judgement is involved in determining the Group provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business.

The Group recognised tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

ANNUAL REPORT 2017 73 Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.4 Significant Accounting Estimates and Judgements (cont’d)

(v) Property development

The Group recognises property development revenue and expenses in profit or loss for the development units sold by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

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

(vi) impairment of property development cost and investment properties

The Group and the Company carried out the impairment test based on a variety of estimation including the value-in-use of the investment properties and property development costs. Estimating the value-in-use required the Group and the Company to make an estimate of the expected future cash flows from these assets and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of investment properties and property development costs of the Group and the Company as at 31 December 2017 were disclosed in Note 13 and 15 to the financial statements respectively.

(vii) Deferred tax assets

Deferred tax assets are recognised for all unabsorbed tax losses and deductible temporary differences to the extent it is probable that taxable profit will be available against which the losses and deductible temporary differences can be utilised. Significant management judgment 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 total carrying values of unrecognised tax losses and deductible temporary differences of the Group were disclosed in Note 21 to the financial statements.

(viii) Construction contracts

The Group and the Company recognises contract revenue and contract costs as revenue and expenses respectively in profit or loss using the stage of completion method. The stage of completion is determined by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Significant judgment is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and costs, as well as the recoverability of the construction contracts. In making the judgment, the Group evaluate based on past experience and by relying on the work of specialists.

(x) contingent liabilities

Determination of the treatment of contingent liabilities in the financial statements is based on the management’s view of the expected outcome of the applicable contingency.

74 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.4 Significant Accounting Estimates and Judgements (cont’d)

(xi) impairment of non-financial assets

The Group assesses whether there are any indicators of impairment on all non-financial assets at each reporting date. Non-financial assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which could trigger an impairment review include evidence of obsolescence or physical damage, significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business, significant adverse industry or economic changes. While the Group believes that the assumptions when determining recoverable amounts are appropriate and reasonable, significant changes in the assumptions may materially affect the assessment of recoverable amounts and may lead to future impairments changes. Any resulting impairment loss could have a material adverse impact on the Group’s financial position and results of operations.

(xii) impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 20.

(xiii) impairment of investment in subsidiaries and plant and equipment

The management determines whether the carrying amount of its investments in subsidiaries and plant and equipment are impaired at each reporting date. This involves measuring the recoverable amounts which includes fair value less costs to sell. Based on the opinion of the directors, adequate impairment loss has been recognised in profit or loss of the Group.

3. REVENUE

Group Company 2017 2016 2017 2016 RM RM RM RM

Construction contracts 677,799,607 699,194,658 - - Sales of construction materials and others 17,185,567 16,886,700 - - Development revenue 31,426,694 35,246,290 - - Rental of motor vehicle and machinery 1,328,232 1,959,394 - - Servicing of motor vehicle 440,147 553,473 - - Rendering of services - - 5,581,482 4,440,429 Management fees from subsidiaries - - 2,940,000 3,540,000 Dividend income - - 20,000,000 - 728,180,247 753,840,515 28,521,482 7,980,429

ANNUAL REPORT 2017 75 Notes to the Financial Statements 31 December 2017 (cont’d)

4. coST OF SALES

Group Company 2017 2016 2017 2016 RM RM RM RM

Construction contract costs 608,902,124 662,313,776 - - Sales of construction materials and others 15,562,000 20,736,803 - - Rental of motor vehicle and machinery 204,166 659,842 - - Servicing of motor vehicle 178,255 212,197 - - Property development costs 19,476,815 9,668,396 - - Cost of services rendered 5,384,109 4,259,252 5,384,109 4,259,252 649,707,469 697,850,266 5,384,109 4,259,252

Included in the cost of sales of the Group and of the Company are finance costs amounting to RM161,566 and RM Nil (2016: RM537,997 and RM Nil) respectively, and director’s remuneration amounting to RM2,126,877 and RM339,000 (2016: RM922,664 and RM90,000) respectively.

5. otHER INCOME

Group Company 2017 2016 2017 2016 RM RM RM RM

Distribution of profit from partnership 3,480,874 383,187 - - Unrealised gain on foreign exchange - 5,005,719 - 2,941,590 Gain on disposal of property, plant and equipment 2,942,725 1,129,503 - - Gain on disposal of land held for development and property development costs 4,397,505 - - - Rental of premises 532,464 533,670 793,368 793,368 Miscellaneous 1,206,505 420,171 - - Gain on disposal of investment in subsidiary - 438,305 - - 12,560,073 7,910,555 793,368 3,734,958

6. FINANCE INCOME

Group Company 2017 2016 2017 2016 RM RM RM RM

Interest from subsidiary companies - - 4,474,491 2,712,212 Short term deposit interest 739,709 1,452,221 - - Fixed deposit interest 4,267,417 3,012,087 198,055 203,616 Interest overdue account 1,291,318 1,713,866 - - Others 213,884 163,149 - - 6,512,328 6,341,323 4,672,546 2,915,828

76 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

7. FINANCE COSTS

Group Company 2017 2016 2017 2016 RM RM RM RM

Bank overdraft interest 1,923,269 1,939,773 - - Banker acceptance interest - 31,661 - - Finance lease interest 449,533 377,964 - - Term loan interest 1,237,206 1,647,804 - - Loan interest - others 1,047,303 1,234,703 - - Others 260,579 106,430 5,367 4,548 4,917,890 5,338,335 5,367 4,548

8. PROFIT BEFORE TAXATION

Profit before tax has been arrived at after charging/(crediting) :

Group Company 2017 2016 2017 2016 RM RM RM RM

Directors’ remuneration 6,586,053 5,673,325 751,624 899,836 Auditors’ remuneration - statutory audit 231,807 234,035 20,000 20,000 - other services 14,500 12,000 14,500 12,000 - over provision - (1,000) - - Depreciation of property, plant and equipment 11,205,765 13,091,816 399,243 399,757 Property, plant and equipment written off 36,835 176,102 - - Rental of premises 1,482,751 1,635,251 394,368 394,368 Rental of vehicle, heavy machinery and equipment 3,354,337 8,778,287 12,000 48,000 Amortisation of leasehold land 5,891 5,891 - - Goodwill written off 9,177 - - - Impairment of investment in associate 1,035,000 - - - Employee benefits expenses 64,853,622 64,026,604 13,651,241 12,405,661 Allowance for doubtful debts 4,650,496 70,976 - - Non - executive directors’ remuneration 221,500 209,000 221,500 209,000 Rental income (532,464) (533,670) (793,368) (793,368) Gain on disposal of property, plant and equipment (2,942,725) (1,129,503) - - Gain on disposal of land held for development and property development costs (4,397,505) - - - Unrealised loss/(gain) on foreign exchange 6,268,298 (5,005,719) 2,027,703 (2,941,590) Distribution of profit from partnership (3,480,874) (383,187) - - Gain on disposal of investment in subsidiary - (438,305) - -

ANNUAL REPORT 2017 77 Notes to the Financial Statements 31 December 2017 (cont’d)

9. EMPLOYEE BENEFITS EXPENSES

Group Company Restated 2017 2016 2017 2016 RM RM RM RM

Wages and salaries 58,694,779 58,232,992 12,197,974 11,069,795 Social security contributions 309,578 326,837 40,108 48,721 Contributions to defined contribution plan 5,849,265 5,466,775 1,413,159 1,287,145 64,853,622 64,026,604 13,651,241 12,405,661

Included in employee benefits expenses of the Group and of the Company are executive directors’ remuneration amounting to RM6,586,053 (2016: RM5,673,325) and RM751,624 (2016: RM899,836) respectively as further disclosed in Note 10.

10. DIRECTORS’ REMUNERATION

Group Company 2017 2016 2017 2016 RM RM RM RM

Executive directors’ remuneration (Note 9): Salary 4,073,144 3,708,765 370,000 465,000 Other emoluments 2,512,909 1,964,560 381,624 434,836 6,586,053 5,673,325 751,624 899,836

Non-executive directors’ remuneration (Note 8) : Fees and allowances 221,500 209,000 221,500 209,000 221,500 209,000 221,500 209,000

The number of directors of the Company whose total salary during the year fell within the following bands is analysed below:

Number of Directors 2017 2016

Executive directors :

RM1,500,001 - RM2,500,000 1 1 RM3,000,001 - RM3,500,000 1 1

Non-executive directors :

Less than RM10,000 1 - RM20,001 - RM30,000 2 2 RM60,001 - RM70,000 1 1 RM90,001 - RM100,000 1 1

78 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

11. income TAX EXPENSE

Group Company 2017 2016 2017 2016 RM RM RM RM

Current income tax 14,688,968 7,552,366 141,558 40,131 Foreign taxation 1,101,894 315,779 - - Transferred to/(from) deferred taxation (Note 21) 1,408,231 (3,039,351) (49,652) (49,775) Changes in tax rates - 34,944 - 5,495

Under/(Over) provision in prior years:

Deferred taxation (Note 21) (3,259) (57) - - Malaysian income tax (12,974) (1,682) (12,931) (488) Total income tax expense 17,182,860 4,861,999 78,975 (4,637)

Current income tax is calculated at the statutory tax rate of 24% (2016: 24%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. During the current financial year, the income tax rate applicable to subsidiaries in Australia is at 30% (2016 : 30%) and subsidiaries in Cambodia and Brunei is at 20% and 18.50% (2016 : 20% and 18.50%) respectively.

The Company has unabsorbed tax losses and unabsorbed capital allowances of approximately RM78,758 (2016: RM78,758) and RM1,221,912 (2016 : RM1,022,708) respectively as at 31 December 2017 for offsetting against future taxable income.

ANNUAL REPORT 2017 79 Notes to the Financial Statements 31 December 2017 (cont’d)

11. income TAX EXPENSE (Cont’d)

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

2017 2016 Group RM RM

Profit before taxation 46,937,642 32,743,049

Taxation at Malaysian statutory tax rate of 24% (2016: 24%) 9,825,539 6,856,982 Over provision in prior years (12,974) (1,682) Income not subject to tax (2,047,487) (1,858,365) Expenses not deductible for tax purposes 10,382,438 1,092,741 Over provision of deferred tax (3,259) (57) Deferred tax asset not recognised in respect of current year’s tax losses - 111,314 Effect of changes in tax rate in foreign jurisdictions 220,379 63,156 Changes in opening deferred tax due to changes in tax rates - 34,944 Utilisation of tax losses and capital allowances (1,181,933) (1,437,034) Unabsorbed tax losses 157 - Income tax expense for the year 17,182,860 4,861,999

Company

Profit before taxation 16,329,108 464,933

Taxation at Malaysian statutory tax rate of 24% (2016: 24%) 3,918,986 111,584 Income not subject to tax (4,800,000) (705,982) Expenses not deductible for tax purposes 972,920 584,754 Over provision of tax in prior year (12,931) (488) Changes in opening deferred tax due to changes in tax rates - 5,495

Income tax expense for the year 78,975 (4,637)

12. eaRNINGS PER SHARE

(a) Basic

Basic earnings per share of the Group is calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.

80 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

12. eaRNINGS PER SHARE (Cont’d)

(a) Basic (Cont’d)

2017 2016 RM RM

Profit attributable to ordinary equity holders of the Company 30,207,261 27,864,422

Weighted average number of ordinary shares in issue 480,497,103 480,497,063

2017 2016 sen sen

Basic earnings per share for :

Profit for the year 6.29 5.80

(b) Diluted

Diluted earnings per share of the Group is calculated by dividing profit for the year attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares in issue during the financial year.

2017 2016 RM RM

Profit attributable to ordinary equity holders of the Company 30,207,261 27,864,422

Weighted average number of ordinary shares in issue 480,497,103 480,497,063

2017 2016 sen sen

Diluted earnings per share for :

Profit for the year 6.29 5.80

13. INVESTMENT PROPERTIES

Group 2017 2016 RM RM

At 1 January 24,341,891 24,341,891 Net gain from fair value adjustments - - Additions - - Disposal - - At 31 December 24,341,891 24,341,891

ANNUAL REPORT 2017 81 Notes to the Financial Statements 31 December 2017 (cont’d)

13. INVESTMENT PROPERTIES (Cont’d)

Investment properties comprise a number of commercial properties that are leased to the Company, subsidiary companies and third parties, and residential properties that are leased to third parties. The subsequent renewal of the leases are negotiated with the lessee and on average renewal period of one year.

Valuation of investment properties

Investment properties are stated at fair value which is based on comparison approach whereby the value of the property is determined by comparing it with recent sales and/or listings of similar properties in the vicinity, or if not available, within similar localities. However, there has been no valuation performed by an independent valuer during the financial year.

2017 2016 RM RM

At fair value :

Freehold land 6,429,745 6,429,745 Freehold land and buildings 17,461,146 17,461,146 Leasehold land and building with unexpired lease period of more than 50 years 451,000 451,000 24,341,891 24,341,891

Total carrying value of properties amounting to RM17,461,146 (2016: RM23,890,891) have been charged to financial institution as security for the bank facilities granted to the subsidiary companies.

The following are recognised in profit or loss in respect of investment properties :

2017 2016 RM RM

Rental income 460,705 454,337

Direct operating expenses :

- income generating properties 112,211 97,848

- non income generating properties - -

82 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

13. INVESTMENT PROPERTIES (Cont’d)

Fair Value Information

Fair value of investment properties are categorised as follows :

2017 RM Level 1 Level 2 Level 3 Total

Group

Land - 6,429,745 - 6,429,745 Land and buildings - 17,912,146 - 17,912,146 - 24,341,891 - 24,341,891

2016 RM Level 1 Level 2 Level 3 Total

Group

Land - 6,429,745 - 6,429,745 Land and buildings - 17,912,146 - 17,912,146 - 24,341,891 - 24,341,891

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.

Level 1 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical investment properties that the entity can access at the measurement date.

Level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the investment property, either directly or indirectly.

Level 2 fair values of land and buildings 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 size. The most significant input into this valuation approach is price per square foot of comparable properties.

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the investment property.

transfer between Level 1 and 2 fair value

There is no transfer between Level 1 and 2 fair values during the financial year.

ANNUAL REPORT 2017 83 R M otal T (77,092) (65,549) (244,961) (208,126) 18,134,133 17,025,661 14,628,367 11,211,656 88,113,179 79,250,010 82,553,841 (22,857,266) (19,801,150) 135,195,009 161,803,851 ------R M (18,714) (10,510) 110,878 462,709 563,077 519,243 ools and T 1,101,034 1,082,320 equipment ------R M 372 (105) (113) 1,647 22,067 20,056 21,962 21,590 equipment elecommunication T ------R M 5,900 (4,149) (4,088) 54,106 57,205 485,164 379,692 486,915 429,710 omputers C ------R M (2,449) (1,572) 112,985 244,768 872,966 2,729,376 1,723,750 2,839,912 1,966,946 Renovation ------R M under 58,567 Building 1,148,465 18,134,133 17,025,661 36,366,826 36,366,826 construction ------(76) R M and (124) 36,350 fittings 250,756 656,640 Furniture 2,666,028 1,794,934 2,702,254 2,045,614 - - - - R M O ffice (4,407) (4,563) (54,082) (53,913) 353,805 148,040 459,604 3,862,230 3,608,378 4,157,546 3,697,942 equipment - - R M otor M (39,071) (40,155) vehicles (190,879) (154,213) 8,268,121 3,934,829 (1,716,909) (1,675,174) 29,360,606 21,167,769 35,681,868 23,233,056 12,448,812 - - - - R M (8,073) (4,472) Plant and 5,792,639 6,276,749 machinery 83,921,029 58,090,747 68,565,238 46,237,048 22,328,190 (21,140,357) (18,125,976) ------R M 160,721 589,071 749,792 Freehold buildings 7,098,854 7,098,854 6,349,062 ------R M land 5,891 570,000 111,236 570,000 117,127 452,873 Leasehold ------R M 23,271 164,837 188,108 961,892 buildings 1,150,000 1,150,000 Leasehold ------R M land Freehold D E Q UI P MENT AN D 1,080,156 1,080,156 1,080,156 land held for land held for development development costs costs development for the year the year for ost/Valuation ost/Valuation t 31 December 2017 - G roup t 31 December Disposals Transfer from from Transfer Transfer from property property from Transfer Exchange difference difference Exchange Disposals Written off Written Exchange difference difference Exchange Additions Additions Written off Written At 1 January 2017 At Depreciation charge charge Depreciation Y, PL ANT PR O P E R T Y, C At 31 December 2017 31 December At Depreciation Accumulated 1 January 2017 At 2017 31 December At Net Carrying Amount Carrying Amount Net 2017 31 December At

a Notes to the Financial Statements 31 December 2017 (cont’d) 14.

84 TRC SYNERGY BERHAD - R M otal T 78,717 68,315 (17,472) (283,027) (313,103) (437,344) (313,103) (261,242) 6,349,895 (2,971,469) (6,415,840) (5,571,164) 13,097,707 81,110,138 88,113,179 47,081,830 139,187,180 135,195,009 - - - - R M 8,302 (4,856) 13,889 23,226 (89,527) (36,472) (41,129) (14,732) 130,859 379,608 462,709 638,325 ools and (126,976) T 1,321,551 1,101,034 equipment ------94 96 R M 1,596 2,011 21,973 18,364 22,067 20,056 equipment elecommunication T ------R M 2,505 2,928 26,755 72,782 (31,393) (26,212) 487,297 330,194 485,164 379,692 105,472 omputers C ------R M 2,174 1,347 306,860 215,673 2,420,342 1,506,730 2,729,376 1,723,750 1,005,626 Renovation ------R M under 296,560 Building 3,823,374 1,148,465 1,148,465 (2,971,469) construction ------66 R M and 110 41,211 fittings 247,100 871,094 Furniture 2,624,707 1,547,768 2,666,028 1,794,934 ------R M (984) 3,912 4,537 O ffice 58,807 (11,834) 207,928 253,852 (134,551) 3,934,062 3,408,731 3,862,230 3,608,378 equipment - - - - R M otor M 35,051 39,678 vehicles (313,103) (214,437) (313,103) (120,196) 3,926,372 3,645,836 8,192,837 (2,787,236) (2,785,067) 28,713,959 20,700,621 29,360,606 21,167,769 - - - R M 984 (782) 20,982 11,361 (21,500) (78,362) (101,987) Plant and 1,670,104 8,386,050 machinery (3,587,475) (2,771,365) 85,940,905 52,542,861 83,921,029 58,090,747 25,830,282 ------R M 160,721 428,350 589,071 Freehold buildings 7,098,854 7,098,854 6,509,783 ------R M land d ) 5,891 570,000 105,345 570,000 111,236 458,764 Leasehold (cont’ ------R M 23,271 141,566 164,837 985,163 buildings 1,150,000 1,150,000 Leasehold ------R M land Freehold 1,080,156 1,080,156 1,080,156 D E Q UI P MENT AN D development costs costs development the year the year Depreciation Depreciation ost/Valuation ost/Valuation Disposals Disposal of subsidiary Reinstatement Reinstatement Disposals Transfer to property to property Transfer Disposal of subsidiary Exchange difference difference Exchange Reclassification Reclassification Written off Written Reinstatement Additions Additions Exchange difference difference Exchange At 1 January 2016 At Written off Written Depreciation charge for for charge Depreciation C At 31 December 2016 - Group 2016 - Group 31 December At Y, PL ANT PR O P E R T Y, Accumulated Accumulated 1 January 2016 At At 31 December 2016 31 December At 2016 31 December At Net Carrying Amount Carrying Amount Net 2016 31 December At

Notes to the Financial Statements 31 December 2017 (cont’d) 14.

ANNUAL REPORT 2017 85 Notes to the Financial Statements 31 December 2017 (cont’d)

14. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

At 31 December 2017 - Company

Furniture Office and fittings equipment Renovation Total RM RM RM RM

At 1 January 2017 2,055,408 757,959 1,937,019 4,750,386 Additions - - - - At 31 December 2017 2,055,408 757,959 1,937,019 4,750,386

Accumulated Depreciation

At 1 January 2017 1,402,827 757,912 1,338,666 3,499,405 Charge for the year 205,541 - 193,702 399,243 At 31 December 2017 1,608,368 757,912 1,532,368 3,898,648

Net Carrying Amount

At 31 December 2017 447,040 47 404,651 851,738

At 31 December 2016 - Company

Furniture Office and fittings equipment Renovation Total RM RM RM RM

At 1 January 2016 2,055,408 757,959 1,937,019 4,750,386 Additions - - - - At 31 December 2016 2,055,408 757,959 1,937,019 4,750,386

Accumulated Depreciation

At 1 January 2016 1,197,286 757,398 1,144,964 3,099,648 Charge for the year 205,541 514 193,702 399,757 At 31 December 2016 1,402,827 757,912 1,338,666 3,499,405

Net Carrying Amount

At 31 December 2016 652,581 47 598,353 1,250,981

86 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

14. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(a) Revaluation

Certain freehold and leasehold land and buildings of the subsidiary company were revalued by an independent professional valuer, KGV - International Property Consultants (M) Sdn. Bhd., using the open market valuation basis. The valuers adopted two approaches which are comparison approach and cost approach to arrive at their opinion of the present market value.

Under comparison approach, the value of the property is determined by comparing it with recent sales and/or listings of similar properties in the vicinity, or if not available, within similar localities. Under cost approach, an indication of value is obtained by adding to the estimated value of the land, taken as vacant, the depreciated reproduction or replacement cost of the building and other improvements.

The carrying amount of land and buildings were adjusted to reflect the revaluations and the resultant surpluses were credited to revaluation reserve.

There have been no valuation performed by an independent valuer during the financial year.

Had the land and building affected been carried at their historical costs less accumulated depreciation, the carrying amounts of the revalued assets that would have been included in the financial statements at the end of the year are as follows :-

2017 2016 RM RM

Leasehold land 383,887 395,375 Freehold land and buildings 3,194,890 3,272,384 Leasehold land and buildings 409,897 424,397 3,988,674 4,092,156

(b) Security

Certain land and buildings of a subsidiary company with a net carrying value of RM2,618,560 (2016: RM2,681,030) have been charged to financial institutions as security for various credit facilities granted to a subsidiary company.

(c) Assets acquired under finance lease arrangements

The net carrying amounts of property, plant and equipment of the Group acquired under finance lease arrangements are as follows :-

2017 2016 RM RM

Plant and machinery 6,788,683 8,259,430 Motor vehicles 10,176,400 6,347,611 16,965,083 14,607,041

ANNUAL REPORT 2017 87 Notes to the Financial Statements 31 December 2017 (cont’d)

15. PROPERTIES HELD FOR DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS

(a) Land Held for Property Development

Freehold Freehold land land and building Total Group RM RM RM

Cost

At 1 January 2017 11,816,945 39,571,374 51,388,319 Disposal of land - (21,596,192) (21,596,192) Transfer to property, plant and equipment - (18,134,133) (18,134,133) Effect of movements in exchange rates - 410,609 410,609 At 31 December 2017 11,816,945 251,658 12,068,603

Cost

At 1 January 2016 11,816,945 38,460,684 50,277,629 Effect of movements in exchange rates - 1,110,690 1,110,690 At 31 December 2016 11,816,945 39,571,374 51,388,319

Included in the land held for property development is a land and building amounting to RM Nil (2016: RM39,319,716) being charged as security for borrowing facility granted by a financial institution as disclosed in Note 29 to the financial statements.

88 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

15. PROPERTIES HELD FOR DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (cont’d)

(b) Property Development Costs

Group 2017 2016 RM RM

Brought forward

- Land 16,437,294 16,305,592 - Development costs 264,056,102 217,152,358 280,493,396 233,457,950 Incurred during the year

- Land costs transferred from property, plant and equipment - 131,702

- Development costs

* Incurred during the year 21,426,156 44,063,977 * Disposal (6,374,634) - * Transfer (to)/from property, plant and equipment (17,025,661) 2,839,767 * Transfer to construction costs (9,021,420) - * Transfer to administrative expenses (354,674) -

- Unsold units transferred to inventories (18,406,216) - 250,736,947 280,493,396 Recognised in income statement

Brought forward (175,850,757) (171,534,159) Current year (6,798,126) (4,316,598) (182,648,883) (175,850,757)

Effect of movements in exchange rates 430,194 285,846 Total 68,518,258 104,928,485

Included in property developments cost incurred during the financial year is finance cost amounting to RM 65,864 (2016 : RM695,089), director’s remuneration amounting to RM 21,150 (2016 : RM52,775), and staff costs amounting to RM 307,400 (2016: RM 3,305,589).

During the financial year, a wholly-owned subsidiary company of the Group has disposed off its landed property together with deferred development costs incurred as disclosed in Note 40 to the financial statements.

ANNUAL REPORT 2017 89 Notes to the Financial Statements 31 December 2017 (cont’d)

16. intangiBLE ASSETS

Group Goodwill Total RM RM

At 1 January 2017 9,177 9,177 Written off (9,177) (9,177) At 31 December 2017 - -

At 1 January 2016 9,177 9,177 Amortisation - - At 31 December 2016 9,177 9,177

(a) Impairment test for goodwill on consolidation

Goodwill on consolidation has been allocated for impairment testing purposes to the individual entities which is also the cash-generating units (“CGUs”) identified.

(b) Key assumptions used to determine recoverable amount

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by the Directors covering a five-year term. Cash flows beyond five year are projected based on assumptions that the fifth year cash flow will be generated by the respective CGUs perpetually. Discounts rate used is based on the pre-tax weighted average cost of capital.

17. inVESTMENT IN SUBSIDIARIES

Group Company 2017 2016 2017 2016 RM RM RM RM

Unquoted shares, at cost - - 82,248,093 82,248,093 Amounts due from subsidiaries - - 24,626,876 23,963,003 - - 106,874,969 106,211,096

Amounts due from subsidiary companies are unsecured, interest free and are repayable on demand.

90 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

17. inVESTMENT IN SUBSIDIARIES (cont’d)

(a) The details of the subsidiary companies are as follows :-

Country of Effective Principal Incorporation Interest (%) Activities Held by the Company : 2017 2016

Trans Resources Corporation Sdn. Bhd. Malaysia 100 100 Construction

TRC Land Sdn. Bhd. Malaysia 100 100 Property development

TRC Energy Sdn. Bhd. Malaysia 100 100 Oil and gas

TRC Infra Sdn. Bhd. Malaysia 100 100 Dormant

* TRC (Aust) Pty Ltd Australia 100 100 Construction and property development

ADS Projek Sdn. Bhd. Malaysia 100 100 Property development

*** TRC International Pte Ltd Malaysia 100 100 Investment holding

Held through subsidiaries :

* Swan Synergy Developments Pty Ltd Australia 100 100 Construction and property development

TRC Development Sdn. Bhd. Malaysia 100 100 Property development and project management

* TRC Land (Cambodia) Limited Kingdom of 100 100 Commercial and trading Cambodia operations, property investment and construction

Liputan Sutera Sdn. Bhd. Malaysia 100 100 Dormant

TRC Concrete Industries Sdn. Bhd. Malaysia 100 100 Manufacture of ready mixed concrete

** TRC (B) Sdn. Bhd. Brunei 90 90 Construction and property Darussalam development

** Petrobru Build Sdn. Bhd. Brunei 60 60 Dormant *** Darussalam

* The Swan Synergy Unit Trust Australia 100 100 Property development

** Endaya TRC PK JV Sdn. Bhd. Malaysia 51 51 Construction

*** Trans Handan Bridge Sdn. Bhd. Malaysia 55 - Construction of bridges, including those for elevated highways

ANNUAL REPORT 2017 91 Notes to the Financial Statements 31 December 2017 (cont’d)

17. inVESTMENT IN SUBSIDIARIES (cont’d)

(a) The details of the subsidiary companies are as follows :- (cont’d)

* The financial statements of TRC (Aust) Pty Ltd, Swan Synergy Developments Pty Ltd, The Swan Synergy Unit Trust and TRC Land (Cambodia) Limited have not been audited due to certain exemptions given by the respective countries.

** Audited by another firm of auditors.

*** The financial statements of TRC International Pte Ltd, Trans Handan Bridge Sdn Bhd and Petrobru Build Sdn. Bhd. have not been consolidated with the financial statements of the Group as the Directors are of the opinion that there will be of no real value in view of the insignificant effect on the financial statements of the Group.

(b) Disposal of a subsidiary company

There is no disposal of subsidiary during the financial year.

The wholly owned subsidiary of the Company, Trans Resources Corporation Sdn. Bhd. (“TRC”) has disposed off its 70% shareholdings of 700,000 ordinary shares of RM1.00 each in TRC (Sarawak) Sdn. Bhd. to Loh Leh Wong and Samaon @ Samson Entebang for a total consideration of RM700,000. This has resulted TRC (Sarawak) Sdn. Bhd. to be an associated company to the Group.

The proceeds from disposal comprise the following :-

Group 2017 2016 RM RM

Proceeds from the disposal, satisfied by cash - 700,000 Deferred consideration - - Total proceeds from disposal - 700,000

92 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

17. inVESTMENT IN SUBSIDIARIES (CONT’D)

(b) Disposal of a subsidiary company (cont’d)

Group 2017 2016 RM RM

The assets and liabilities as at date of disposal are as follows:- Property, plant and equipment - 185,889 Amount due from contract customers - 1,248,781 Trade receivables - 1,048,470 Amount due from holding company - 273,895 Other receivables - 19,460 Tax recoverable - 28,644 Cash and bank balances - 973,463 Trade payables - (2,384,483) Other payables - (1,132,424) Attributable goodwill - -

Group share of net assets - 261,695

Gain on disposal - 438,305

Total consideration - 700,000

Less : Cash and bank balances disposed off - (973,463) Less : Amount due from holding company - (273,895)

Net cash outflow - (547,358)

(c) Acquisition of a subsidiary company

(i) The Company’s wholly owned subsidiary, Trans Resources Corporation Sdn. Bhd. (“TRC”) had on 29 December 2017 incorporated a new subsidiary company namely Trans Handan Bridge Sdn. Bhd. (“THBSB”), under the Companies Act, 2016 to undertake construction of elevated guideway and bridge works specialist in heavy lifting and launching works.

THBSB is a private limited company having an issued share capital of RM100 divided into 100 ordinary shares. THBSB is a joint venture company whereby TRC holds 55% of the shares. A Notice of Registration of THBSB dated 29 December 2017 issued by the Company Commission of Malaysia was received on 29 December 2017.

(ii) TRC has acquired 5,100,000 ordinary shares of RM1.00 each in Endaya TRC PK JV Sdn. Bhd. for a total consideration of RM5,097,650.

The cost of acquisition comprise the following :-

Group 2017 2016 RM RM

Purchase cost of acquisition satisfied by cash - 5,097,950 Cost attributable to the acquisition, paid in cash - - Total cost of acquisition - 5,097,950

ANNUAL REPORT 2017 93 Notes to the Financial Statements 31 December 2017 (cont’d)

17. inVESTMENT IN SUBSIDIARIES (CONT’D)

(c) Acquisition of a subsidiary company (cont’d)

The assets and liabilities arising from the acquisition are as follows:-

Group 2017 2016 RM RM

Amount due from contract customers - 3,383,281 Cash and bank balances - 6,612,111 Non-controlling interest - (4,897,742)

Share of net assets acquired - 5,097,650 Goodwill - - Total purchase consideration - 5,097,650

Less : Cash and bank balances - (6,612,111)

Net cash inflow - (1,514,461)

(d) Non-controlling interest in subsidiary

The Group’s subsidiary that has material non-controlling interest (“NCI”) is as follows :

Endaya TRC (B) TRC PK JV Sdn. Bhd. Sdn. Bhd. Total

In RM

Year ended 31 December 2017

NCI percentage of ownership interest and voting interest 10% 49%

Carrying amount of NCI (562,692) 5,090,459 4,527,767

Year ended 31 December 2016

NCI percentage of ownership interest and voting interest 10% 49%

Carrying amount of NCI 67,109 4,916,523 4,983,632

94 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

17. inVESTMENT IN SUBSIDIARIES (CONT’D)

(d) Non-controlling interest in subsidiary (cont’d)

Summarised financial information on subsidiaries with material NCI :

i) Summarised statement of profit or loss and other comprehensive income

TRC (B) Sdn. Bhd. Endaya TRC PK JV Sdn. Bhd. For the financial For the financial year ended 31 December year ended 31 December 2017 2016 2017 2016 RM RM RM RM

Revenue 33,161,918 32,173,881 144,479,035 3,438,416

(Loss)/Profit before tax (4,857,460) (1,458,566) 467,815 50,731 Income tax expense (1,406,694) 1,437,034 (112,844) (12,402)

(Loss)/Profit for the financial year (6,264,154) (21,532) 354,971 38,329 Other comprehensive income - - - - Foreign currency translation - - - -

Total comprehensive (loss)/ income (6,264,154) (21,532) 354,971 38,329

Total comprehensive (loss)/ income allocated to NCI (626,415) (2,153) 173,936 18,781

(ii) Summarised statement of financial position

TRC (B) Sdn. Bhd. Endaya TRC PK JV Sdn. Bhd. For the financial For the financial year ended 31 December year ended 31 December 2017 2016 2017 2016 RM RM RM RM

Current

Assets 95,749,278 61,440,582 43,527,206 10,057,348 Liabilities (100,393,030) (61,654,219) (33,138,514) (23,627)

Total current net (liabilities)/assets (4,643,752) (213,637) 10,388,692 10,033,721

Non-current

Assets 874,937 2,742,838 - - Liabilities - - - - Total non-current net assets 874,937 2,742,838 - -

Net (liabilities)/assets (3,768,815) 2,529,201 10,388,692 10,033,721

ANNUAL REPORT 2017 95 Notes to the Financial Statements 31 December 2017 (cont’d)

17. inVESTMENT IN SUBSIDIARIES (CONT’D)

(d) Non-controlling interest in subsidiary (cont’d)

(iii) Summarised statement of cash flows

TRC (B) Sdn. Bhd. Endaya TRC PK JV Sdn. Bhd. For the financial For the financial year ended 31 December year ended 31 December 2017 2016 2017 2016 RM RM RM RM

Cash flows from operating activities

Cash generated from operations (6,897,114) 14,070,979 6,862,691 (3,429,666) Interest paid - - (50,973) - Interest received 2,831 5,562 198,322 - Net cash (used in)/generated from operating activities (6,894,283) 14,076,541 7,010,040 (3,429,666)

Net cash generated from investing activities 5,165 414,192 - - Net cash (used in)/generated from financing activities (20,237) 18,230 (12,509,754) 10,000,000

Net (decrease)/increase in cash and cash equivalents (6,909,354) 14,508,963 (5,499,714) 6,570,334

Foreign currency translation 1,023,413 18,468 - -

Cash and cash equivalents at beginning of the financial year 24,938,124 10,410,693 6,570,334 -

Cash and cash equivalents at end of the financial year 19,052,183 24,938,124 1,070,620 6,570,334

18. INVESTMENT IN ASSOCIATES

Group Company 2017 2016 2017 2016 RM RM RM RM

Unquoted shares, at cost 9,589,396 11,590,002 - -

Share of post - acquisition reserves :

Share of profit of associates 5,687,671 951,566 - - Share of exchange reserve (1,517,976) (1,770,455) - - 13,759,091 10,771,113 - -

96 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

18. inVESTMENT IN ASSOCIATES (Cont’d)

Details of the associates of the Group are as follows :-

Name of Company Country of Principal Equity Incorporation Activity Interest 2017 2016

Pretty Sally Holdings Pty Ltd Australia Property development 33.33% 33.33%

Delta Garden Limited Kingdom of Cambodia Property development 34% 34%

Petrobru (B) Sdn. Bhd. Brunei Darussalam Dormant 40% 40%

PSH Investment Pty Ltd Australia Dormant 33.33% 33.33%

Hermitage Building Group Pty Australia Project management 33.33% 33.33% Ltd (formerly known as Mae Synergy Pty Ltd)

* TRC (Sarawak) Sdn. Bhd. Malaysia Construction 30% 30%

* Audited by another firm of auditors.

Under the Australian Standards, Pretty Sally Holdings Pty Ltd is not required to prepare a group consolidated financial statements because it is a proprietary limited company in Australia.

The financial year end of Petrobru (B) Sdn. Bhd. is on 30 September and all associate companies in Australia are on 30 June. For the purpose of applying the equity method of accounting, the unaudited financial statements of the associates have been used and appropriate adjustments have been made for the effects of significant transaction between their financial years to 31 December 2017. All the associates except those incorporated in Australia, and Delta Garden Limited (exempted from being audit by the respective countries law) are audited by other firm of auditors.

The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows :

Group 2017 2016 RM RM Assets and liabilities :

Total assets 185,029,473 175,661,113 Total liabilities (184,167,125) (183,332,620)

Results :

Revenue 290,395,419 185,160,150 Profit for the year 14,362,967 6,959,325

ANNUAL REPORT 2017 97 Notes to the Financial Statements 31 December 2017 (cont’d)

19. OTHER INVESTMENTS

Group Company 2017 2016 2017 2016 RM RM RM RM

Investment in partnership 31,890,271 29,049,952 - - Corporate membership, at cost 144,000 144,000 - - 32,034,271 29,193,952 - -

20. TRADE AND OTHER RECEIVABLES

Group Company 2017 2016 2017 2016 RM RM RM RM

Current

Trade receivables

Third parties 168,335,250 121,497,318 - -

Construction contracts : Retention sums (Note 23) 99,169,296 106,688,413 - - 267,504,546 228,185,731 - -

Group Company 2017 2016 2017 2016 RM RM RM RM

Other receivables

Deposits 6,325,628 4,763,656 2,000 2,000 Prepayments 1,070,621 1,296,006 3,000 3,000 Tax recoverable 2,773,998 5,562,399 394,102 574,643 Loans to associates 8,113,301 13,532,279 - - Other receivables 14,927,349 13,744,863 14,232 13,985 Other receivables, net 33,210,897 38,899,203 413,334 593,628

Total 300,715,443 267,084,934 413,334 593,628

Non-current

Other receivables

Subsidiaries - - 158,026,484 151,814,204 - - 158,026,484 151,814,204

98 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

20. tRADE AND OTHER RECEIVABLES (Cont’d)

(a) trade receivables

Trade receivables are non-interest bearing except for an amount of RM33,458,125 (2016: RM41,925,092) which is subject to 5% (2016: 5%) interest per annum and are receivable generally on 30 to 90 days (2016: 30 to 90 days) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Ageing analysis of trade receivables 2017 2016 RM RM

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

Neither past due nor impaired 141,636,869 113,056,882 1 to 30 days past due not impaired 57,228,289 32,192,720 31 to 60 days past due not impaired 8,081,860 634,902 61 to 90 days past due not impaired 206,002 682,647 Over 90 days past due not impaired 60,351,526 81,618,580 267,504,546 228,185,731 Impaired - - 267,504,546 228,185,731

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM125,867,677 (2016: RM115,128,849) that are past due at the reporting date but not impaired.

Performance bank guarantee

The Company’s wholly owned subsidiary, Trans Resources Corporation Sdn. Bhd. (“TRC”) has awarded a project of Modernization of Brunei International Airport Terminal from Brunei Economic Development Board (“BEDB”) to its wholly owned subsidiary TRC (B) Sdn. Bhd. (“TRCB”). This project was awarded to TRCB by TRC under the same terms and conditions as that between TRC and BEDB.

During the financial year, BEDB had claimed the performance bond of RM39,548,600 (BND13,000,000) from TRC. The amount has been paid to BEDB and TRCB has recorded this amount under trade receivables. Under the terms of the contract, “if it was determined that the employer was not entitled to make the claim, the contractor shall require the employer to repay the contractor all amount paid to the employer under such claim plus interest”. TRCB is disputing the claim made by BEDB on the guarantee.

BEDB has also made claims for liquidated damages of RM49,721,717 (BND16,344,000) from TRCB. TRCB has submitted a statement of final account of RM133,460,885 (BND43,869,859) including claims for prolongation and delays to BEDB. The parties have met to discuss a resolution of this matter. There has been no outcome of the discussion or determination by the supervising officer.

TRCB has provided for damages and losses in relation to the project and dispute of RM9,373,359 (BND3,000,000) for the year.

(b) Amounts due from subsidiaries (non - current)

Amount due from subsidiaries are unsecured, repayable on demand and are subject to interest of 1% - 5% (2016: 1% - 5%) per annum.

ANNUAL REPORT 2017 99 Notes to the Financial Statements 31 December 2017 (cont’d)

20. tRADE AND OTHER RECEIVABLES (Cont’d)

(c) other receivables

Amount due from associates

Amount due from associates are unsecured, non-interest bearing and are repayable on demand.

Deposits

Included in the Group’s deposits is total amount of RM1,249,500 (2016: RM Nil), being payment made by a subsidiary company for the acquisition of plant and machinery.

100 TRC SYNERGY BERHAD R M s at A s at 2017 (231,313) (403,540) (172,227) 1,640,694 1,640,694 1,237,154 31 December 31 December - - - R M nder (3,259) (3,259) (3,259) U provision - - - R M 24,651 24,651 24,651 xchange E xchange difference difference R M or loss 879,375 in profit (708,870) (708,870) 2,117,101 1,408,231 1,237,726 Recognised Recognised R M s at A s at 2017 2016/1 January (192,469) 2,349,564 2,349,564 (1,110,688) (2,542,033) (1,431,345) 31 December 31 December - - - (57) (57) (57) R M ver O ver

provision - R M 5,495 5,495 29,449 29,449 34,944 tax rates affecting affecting hanges in C hanges in profit or loss - - - R M 5,689 5,689 5,689 xchange E xchange

difference R M or loss in profit (708,446) (708,446) (893,871) (2,330,905) (3,039,351) (1,437,034) Recognised Recognised - R M s at A s at 2016 (222,312) (222,312) 1 January 3,028,618 3,028,618 2,806,306 G roup Deferred tax assets : tax assets Deferred Unused tax losses Property, plant and equipment and equipment plant Property, Deferred tax liabilities : Deferred and equipment plant Property, D TA X ATION D E F RR : to the followings relates tax as at 31 December income Deferred

Notes to the Financial Statements 31 December 2017 (cont’d) 21.

ANNUAL REPORT 2017 101 Notes to the Financial Statements 31 December 2017 (cont’d)

21. DEFERRED TAXATION (CONT’D)

Company Changes in As at Recognised tax rates As at Recognised As at 1 January in profit affecting 31 December in profit 31 December 2016 or loss profit or loss 2016 or loss 2017 RM RM RM RM RM RM

Deferred tax (assets)/liabilities :

Property, plant and equipment (137,381) (49,775) 5,495 (181,661) (49,652) (231,313)

(137,381) (49,775) 5,495 (181,661) (49,652) (231,313)

22. INVENTORIES

Group 2017 2016 RM RM

Cost

Raw materials 682,095 154,466 Completed properties 18,726,334 320,118 19,408,429 474,584

23. DUE FROM/(TO) CUSTOMERS ON CONTRACTS

Group 2017 2016 RM RM

Construction costs incurred to date 4,902,801,433 4,329,084,541 Attributable profits 356,498,957 239,359,580 5,259,300,390 4,568,444,121

Less: Provision for foreseeable losses - (4,648) 5,259,300,390 4,568,439,473

Less : Progress billings (5,279,618,655) (4,565,232,278) (20,318,265) 3,207,195

Due from customers on contract (Note 24) 38,670,024 55,734,062 Due to customers on contract (Note 31) (58,988,289) (52,526,867) (20,318,265) 3,207,195

Advances received on contracts, included within trade payables (Note 30) 21,523,551 56,919

Retention sums on contract, included within trade receivables (Note 20) 99,169,296 106,688,413

102 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

23. DUE FROM/(TO) CUSTOMERS ON CONTRACTS (Cont’d)

The cost incurred to date on construction contracts include the following charges made during the financial year.

Group 2017 2016 RM RM

Property, plant and equipment written off - 53,055 Depreciation of property, plant and equipment 8,438,416 9,609,901 Project finance charges 11,499,672 5,044,435 Rental of premises 1,251,890 1,400,338 Hiring of motor vehicles and heavy machineries 10,068,629 8,661,811

24. otHER CURRENT ASSETS

Group Company 2017 2016 2017 2016 RM RM RM RM

Amount due from customers on contract (Note 23) 38,670,024 55,734,062 - - Accrued billings in respect of property development costs 3,967,335 - - -

42,637,359 55,734,062 - -

25. caSH AND CASH EQUIVALENTS

Group Company 2017 2016 2017 2016 RM RM RM RM

Cash on hand and at banks 78,798,980 98,110,887 215,679 121,222

Deposits :

Short term deposits with licensed banks 2,575,991 2,575,991 - -

Fixed deposits with licensed banks 139,058,123 133,133,410 6,843,038 6,675,303

Total cash and cash equivalents 220,433,094 233,820,288 7,058,717 6,796,525

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are placed for varying periods of between one day and six days (2016: one day and twelve days) depending on the immediate cash requirements of the Group, and earn interests at the respective short-term deposit rates. The weighted average effective interest rate as at 31 December 2017 for the Group was 2.70% (2016: 3.63%) per annum.

Fixed deposits are placed for varying periods of between one month and twelve months (2016: one month and twelve months) depending on the immediate cash requirements of the Group and the Company, and earn interests at the respective fixed deposit rates. The weighted average effective interest rate as at 31 December 2017 for the Group and the Company ranges from 0.45% - 3.30% (2016: 0.45% - 3.45%) per annum.

ANNUAL REPORT 2017 103 Notes to the Financial Statements 31 December 2017 (cont’d)

25. caSH AND CASH EQUIVALENTS (cont’d)

Included in cash at banks of the Group are amounts of RM1,059,885 (2016: RM8,032,680) held pursuant to Section 7A of the Housing Developers (Control and Licensing) Act, 1966 and are restricted from use in other operations.

Deposits with other financial institutions of the Group and the Company amounting to RM138,058,123 (2016: RM132,133,410) and RM5,843,038 (2016: RM5,675,303) respectively are pledged as securities for borrowings (Note 29).

For the purpose of the statements of cash flow, cash and cash equivalents comprise the following as at the statement of financial position date :

Group Company 2017 2016 2017 2016 RM RM RM RM

Cash and bank balances 78,798,980 98,110,887 215,679 121,222 Fixed deposits with licensed banks 1,000,000 1,000,000 1,000,000 1,000,000 Short term deposit with licensed bank 2,575,991 2,575,991 - - Bank overdrafts (26,622,974) (21,774,716) - -

Total cash and cash equivalents 55,751,997 79,912,162 1,215,679 1,121,222

26. SHARE CAPITAL AND SHARE PREMIUM

Number of ordinary shares Amount 2017 2016 2017 2016 RM RM

Authorised share capital

At 1 January/31 December N/A 1,000,000,000 N/A 500,000,000

Number of ordinary shares |------Amount ------| Total Share Share share capital capital capital (issued and (issued and Share and share fully paid) fully paid) premium premium RM RM RM

1 January 2017 480,497,103 240,248,552 208,118 240,456,670

Adjustment for the effect of Companies Act 2016 - Share premium - 208,118 (208,118) - At 31 December 2017 480,497,103 240,456,670 - 240,456,670

104 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

26. SHARE CAPITAL AND SHARE PREMIUM (Cont’d)

Number of ordinary shares of RM0.50 each |------Amount ------| Total Share Share share capital capital capital (issued and (issued and Share and share fully paid) fully paid) premium premium RM RM RM

1 January 2016 480,497,023 240,248,512 208,109 240,456,621

Ordinary shares issued during the year :

Pursuant to Warrant A - - - - Pursuant to Warrant B 80 40 9 49 At 31 December 2016 480,497,103 240,248,552 208,118 240,456,670

Under the Companies Act, 2016 in Malaysia which came into effect on 31 January 2017, the concept of authorised share capital and par value of share capital no longer exists.

In accordance with Section 618 of the Companies Act, 2016, any amount standing to the credit of the share premium account has become part of the Company’s share capital. The Company has twenty-four months upon the commencement of Companies Act, 2016 on 31 January 2017 to utilise the credit.

Included in share capital is share premium amounting to RM208,118 that is available to be utilised in accordance with Section 618(3) of Companies Act, 2016 on or before 30 January 2019 (24 months from commencement of Section 74).

Warrants A 2007/2017

A total of 30,800,000 free warrants were issued by the Company in conjunction with the Rights Issue in 2007. Each warrant is exercisable into one new ordinary share of RM1.00 each at the exercise price of RM1.00 per ordinary share.

Consequential to the Bonus Issue in 2008, the Company had issued an additional 6,101,520 new Warrants 2007/2017 pursuant to the adjustments in accordance with the provision under the Deed Poll executed by the Company on 15 November 2006 constituting the Warrants (“Deed Poll”).

The exercise price of the existing Warrants A 2007/2017 were adjusted to RM0.50 each pursuant to the Share Split and Bonus Issue of shares in 2011. No Warrants A were exercised during the financial year and the warrants has expired on 21 January 2017

The warrants are valid for a period of ten years and expired on 21 January 2017.

The salient features of the Warrants 2007/2017 are as follows :-

(i) 30,800,000 free Warrants are issued in conjunction with the Rights Issue to the Entitled Shareholders on the basis of 1 free Warrant attached to every 1 Rights Share and RM1.00 nominal value of ICULS subscribed. The warrants are immediately detached upon issuance and traded on Bursa Malaysia Securities Berhad separately. The warrants are traded in board lots of 100 units each carrying the right to subscribe for 100 new TRCS shares;

(ii) each Warrants entitles the registered holders at any time during the exercise period of ten (10) years from the date of first issue of the Warrants to subscribe for one (1) ordinary share of RM1.00 at an exercise price of RM1.00. Subsequent to the Share Split and Bonus Issue of shares in 2011, each Warrants is exercisable into one new ordinary share of RM0.50 each at the exercise price of RM0.50;

ANNUAL REPORT 2017 105 Notes to the Financial Statements 31 December 2017 (cont’d)

26. SHARE CAPITAL AND SHARE PREMIUM (Cont’d)

Warrants A 2007/2017 (cont’d)

The salient features of the Warrants 2007/2017 are as follows :- (cont’d)

(iii) the exercise price and/or the number of the Warrants outstanding may be adjusted in accordance with the provisions set out in the Deed Poll;

(iv) upon expiry of the exercise period, any unexercised rights will lapse and cease to be valid for any purposes; and

(v) The new ordinary shares to be allotted and issued upon exercise of the Warrants shall rank pari passu in all respects with the existing ordinary shares of the Company except that they will not be entitled to any dividends, rights, allotments and other distributions the entitlement date of which precedes or falls on the relevant conversion date.

Set out below are details of the free warrants issued by the Company :

Number of warrants A 2007/2017 Issuance Expiry Exercise At At date date price 1.1.2017 Exercised Expired 31.12.2017 RM/share

20.1.2007 21.1.2017 0.50 86,738,717 - (86,738,717) -

27. otHER RESERVES

Group Foreign Currency Asset Translation Revaluation Reserve Reserve Total RM RM RM

At 1 January 2017 (1,486,673) 3,812,128 2,325,455

Other comprehensive income :

Group (350,991) - (350,991) Associates 252,479 - 252,479 At 31 December 2017 (1,585,185) 3,812,128 2,226,943

At 1 January 2016 (1,114,655) 3,812,128 2,697,473

Other comprehensive income :

Group 37,782 - 37,782 Associates (409,800) - (409,800) At 31 December 2016 (1,486,673) 3,812,128 2,325,455

106 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

27. otHER RESERVES (Cont’d)

(a) Asset revaluation reserve

The asset revaluation reserve is used to record increases in the fair value of the asset and decreases to the extent that the such decrease relates to an increase on the same asset previously recognised in equity.

(b) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

28. RETAINED EARNINGS

The Company is able to distribute dividends out of its entire retained earnings under the single-tier system.

29. BORROWINGS

Group Company 2017 2016 2017 2016 RM RM RM RM

Secured :

Short term borrowings

Bankers’ acceptance 16,379,210 34,799,000 - - Bank overdrafts 26,622,974 21,774,716 - - Revolving credit 5,000,000 12,232,363 - - Revolving loan 15,000,000 20,000,000 - - Invoice financing 20,518,894 8,152,745 - - Term loan - 24,637,000 - - Promissory note financing 6,129,721 10,945,250 - - Trust receipt 1,499,900 13,116,031 - - Market rate loan - 18,577,100 - - Finance lease payables (Note 32) 5,269,983 4,105,891 - - 96,420,682 168,340,096 - -

Secured :

Long term borrowings

Finance lease payables (Note 32) 6,186,072 3,158,607 - - 6,186,072 3,158,607 - - Total borrowings 102,606,754 171,498,703 - -

ANNUAL REPORT 2017 107 Notes to the Financial Statements 31 December 2017 (cont’d)

29. BORROWINGS (Cont’d)

(i) Bank overdrafts

The bank overdrafts of the subsidiary companies are subject to interest at rates ranging from 0.70% to 2.0% (2016: 0.70% to 2.0%) per annum above the banks’ base lending rates and the Group had available amount of RM35,200,000 (2016: RM35,200,000) undrawn committed borrowing facility.

(ii) Bankers’ acceptance

The bankers’ acceptance are subject to commissions at rates of approximately 0.70% - 1.0% (2016: 0.70% - 1.0%) per annum and interest rates of 0.70% - 1.0% (2016: 1.00% - 2.0%) per annum above the banks’ cost of funds and the Group had available current of RM1,500,000 (2016: RM1,500,000) undrawn committed borrowing facility.

(iii) Obligations under finance leases

These obligations are secured by a corporate guarantee from the holding company and a charge over the leased assets (Note 14). The average discount rate implicit in the leases ranges from 2.66% - 3.36% (2016: 2.97% - 3.36%) per annum.

(iv) Other short term trade facilities

The Group has not utilised the factoring facility during the financial year.

The above facilities are secured by :-

(a) Existing Open All Monies Facilities Agreement; (b) Legal Deed of Assignment of Contract Proceeds; (c) Letter of Irrevocable Instruction by the subsidiary ; (d) Certain fixed deposits of the subsidiary; (e) A corporate guarantee by the Company; and (f) A first legal charge over the property held under H. S. (M) 14713, PT 4855, Bandar Ulu Kelang, Taman Andaman Ukay, Daerah Gombak, Negeri Selangor.

(v) Term loan

The term loan is subject to interest rates of Nil (2016: 1.50% to 2.20%) per annum above the banks’ cost of funds and the Group had available amount of RM20,250,000 (2016: RM20,250,000) undrawn committed borrowing facility. The term loan is secured by :-

(a) Facilities Agreement; (b) Charge over Cash Deposit of RM5,800,000; (c) All Monies Corporate Guaratee from the Company; (d) Letter of Negative Pledge; (e) Letter of Undertaking from the Company; (f) A corporate guarantee by the Company; (g) Sale and Purchase Agreement; and (h) All Monies Legal Charge or All Monies Deed of Assignment over a piece of vacant land identified as Geran 314188, Lot 73971, Section U3 @ At the Junction of Jalan Lapangan Terbang Subang Baru & Jalan Lapangan Terbang Subang Lama, Section U3, Shah Alam, Selangor. (i) A first legal charge over the property held under H. S. (M) 14713, PT 4855, Bandar Ulu Kelang, Taman Andaman Ukay, Daerah Gombak, Negeri Selangor.

(vi) Revolving loan

The revolving loan is subject to interest rate of 0.85% (2016: 0.75%) per annum above the bank’s cost of funds.

108 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

29. BORROWINGS (Cont’d)

(vi) Revolving loan (cont’d)

The revolving loan is secured by :-

(a) Corporate Guarantee from the Company; (b) Blanket Counter Indemnity from the subsidiary; (c) Trade Financing General Agreement; (d) Letter of Negative Pledge from the subsidiary; (e) Letter of Undertaking from the Company; and (f) Time Deposit totalling up to RM8.4 million.

(vii) Revolving credit

The revolving credit is subject to interest rate of 1.00% (2016: 1.00% - 1.50%) per annum above the bank’s cost of funds.

The revolving credit is secured by :-

(a) Corporate Guarantee from the Company; (b) Trade Finance General Agreement; (c) Master Trust Receipt Agreement; (d) Irrevocable and unconditional letter of instruction; (e) Irrevocable letter of payment notification; (f) Assignment of performance bonds; (g) Pledge of fixed deposit of RM50 million by way of sinking fund. (h) Legal assignment of contract proceeds; and (i) Letter of Set - Off.

(viii) Promissory Note Financing

The promissory note financing is subject to interest rate of 0.70% (2016: 0.70%) per annum above the bank’s effective cost of funds.

The promissory note financing is secured by :-

(a) Existing Open All Monies Facilities Agreement; (b) Corporate guarantee from the Company; (c) Existing letter of set off over 1st party fixed deposits; (d) Upfront placement of fixed deposits of the subsidiary; and (e) Two parties Deed of Assignment of Contract Proceeds.

(ix) Invoice Financing

The invoice financing is subject to interest rates of 0.85% to 1.50% (2016: 0.85% to 1.50%) per annum plus bank’s cost of funds and commission at 0.50% (2016: Nil) per annum.

ANNUAL REPORT 2017 109 Notes to the Financial Statements 31 December 2017 (cont’d)

29. BORROWINGS (Cont’d)

(ix) Invoice Financing (cont’d)

The invoice financing is secured by :-

(a) Existing Letter of Set - Off; (b) Existing All Monies Corporate Guarantee; (c) Existing Letter of Negative Pledge. (d) Upfront placement of fixed deposit of RM1 million upon receipt of advance payment from the Contract Awarder. Thereafter the balance of RM1,755,250 is to be placed by way of sinking fund. (e) Corporate Guarantee by the Company; (f) Trade Finance General Agreement; (g) Master Trust Receipt Agreement; (h) Irrevocable and unconditional letter of instruction; (i) Irrevocable letter of payment notification;

(x) Trust Receipt

The trust receipt is subject to interest rate currently at 0.75% (2016: 0.60%) for each month or part thereof.

The trust receipt is secured by :-

(a) Corporate guarantee from the Company; (b) Blanket Counter Indemnity; (c) Third party Blanket Counter Indemnity; (d) Letter of Negative Pledge; (e) Facilities agreement; (f) The deposit of 10% of facilities amount; (g) Letter of Set Off; (h) Legal assignment of contract proceeds; (i) Letter of undertaking; (j) Irrevocable Letter of Instruction; and (k) Irrevocable Letter of Authorisation.

(xi) Market Rate Loan

The market rate loan is subject to interest rate of Nil (2016: 2.00%) per annum. However, the rates are indicative and subject to change for a reset period of three months. The facility is secured by :

(a) an unlimited guarantee on general security interest by a subsidiary company; (b) term deposit of a subsidiary; (c) a first registered mortgage over non-residential real property located at 588, Swan Street Richmond VIC 3121; and (d) first ranking charge over all present and after acquired property of certain subsidiary companies.

The market rate loan has been fully settled during the year.

110 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

30. TRADE AND OTHER PAYABLES

Group Company 2017 2016 2017 2016 RM RM RM RM

Trade payables

Third parties 172,397,975 187,783,567 - - Associate company 22,095,462 8,062,083 - - Advances received (Note 23) 21,523,551 56,919 - -

Trade payables, net 216,016,988 195,902,569 - -

Other payables

Associate company - 140,280 - - Accruals 2,041,846 1,494,966 245,627 264,129 Other payables 23,346,768 8,363,921 1,369,984 1,863,710 25,388,614 9,999,167 1,615,611 2,127,839 Total trade and other payables 241,405,602 205,901,736 1,615,611 2,127,839

Trade payables are non - interest bearing and the normal trade credit terms granted to the Group range from one month to three months.

31. OTHER CURRENT LIABILITIES

Group 2017 2016 RM RM

Amount due to customers for contract (Note 23) 58,988,289 52,526,867

Progress billings in respect of property development - 8,182,866 58,988,289 60,709,733

ANNUAL REPORT 2017 111 Notes to the Financial Statements 31 December 2017 (cont’d)

32. FINANCE LEASE PAYABLES

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:-

Group 2017 2016 RM RM

Future minimum lease payments :

Not later than one year 5,756,451 4,383,810

Later than one year and not later than two years 4,284,219 2,411,019 Later than two years and not later than five years 2,170,077 876,167 Total future minimum lease payments 12,210,747 7,670,996

Less : Future finance charges (754,692) (406,498) Present value of finance lease liabilities 11,456,055 7,264,498

Analysis of present value of finance lease liabilities :

Not later than one year 5,269,983 4,105,891 Later than one year and not later than two years 4,062,063 2,299,786 Later than two years and not later than five years 2,124,009 858,821

11,456,055 7,264,498

Amount due within 12 months (5,269,983) (4,105,891)

Amount due after 12 months 6,186,072 3,158,607

33. CASH PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Group Company 2017 2016 2017 2016 RM RM RM RM

Purchase of property, plant and equipment 14,628,367 6,349,895 - - Less : Financed by hire purchase arrangement (7,908,273) (3,617,745) - - 6,720,094 2,732,150 - -

112 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

34. DIVIDENDS

Dividends in respect Dividends of Year Recognised in Year 2017 2016 2017 2016 RM RM RM RM

Recognised during the year :

First and final single tier dividend for 2016: 1.90 sen per share on 480,497,103 ordinary shares - 9,129,445 9,129,445 3,123,231

At the forthcoming Annual General Meeting, a provisional single tier dividend in respect of the financial year ended 31 December 2017, of 2.80 sen per share on 480,497,103 ordinary shares amounting to a dividend payable of RM13,453,919 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2018.

35. contingencieS

a) contingent liabilities

Group Company 2017 2016 2017 2016 RM RM RM RM

Secured

Bank guarantees

Performance bond 283,285,911 189,379,675 47,500,000 47,500,000 Advance bond 73,950,191 10,000,000 - - Tender bond - 3,550,000 - - Supplier/Maintenance/Securities 3,151,750 1,170,480 - - 360,387,852 204,100,155 47,500,000 47,500,000

The bank guarantees are secured by fixed deposits of the Group and the Company and a corporate guarantee by the Company and a subsidiary company.

Included in the bank guarantee of the Group is an amount of RM360,000 (2016: RM360,000) and RM1,700,000 (2016: RM Nil) being utilised by a subsidiary and an associate company respectively.

ANNUAL REPORT 2017 113 Notes to the Financial Statements 31 December 2017 (cont’d)

35. contingencieS (Cont’d)

a) contingent liabilities (cont’d)

As at the date of the statements of financial position, the Group and the Company has unutilised bank guarantees facilities amounting to RM198,267,148 (2016: RM169,300,223) and RM2,500,000 (2016: RM2,500,000) respectively.

Group Company 2017 2016 2017 2016 RM RM RM RM

Unsecured :

(i) Corporate guarantees given to banks for credit facilities 102,606,754 152,921,603 102,264,303 152,921,603

Total exposure of corporate guarantee facilities given 792,160,747 433,125,996 790,160,747 431,125,996

(ii) Corporate guarantees given to banks for credit facilities granted to associates 3,600,978 - - -

Total exposure of corporate guarantee to associate company amounting to RM3,931,066 (2016 : Nil)

The corporate guarantee does not have a determinable effect on the terms of the credit facilities due to the bank requiring parent guarantee as a pre-condition for approving the credit facilities granted to the subsidiaries. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities amount received by the subsidiaries. As such, there is no value on the corporate guarantee to be recognised in the financial statements.

b) contingent asset

This represents the award granted by the Arbitrator to the Group amounting to RM2,209,335 against Carmichael Asia Sdn. Bhd. as mentioned in Note 42 of the financial statements. This amount has not been recognised in the financial statements.

36. RELATED PARTY TRANSACTIONS

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the directors of the Group, and certain members of senior management of the Group.

The Group has related party relationship with its significant investors, subsidiaries and associates, directors and key management personnel.

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year.

114 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

36. RELATED PARTY TRANSACTIONS (Cont’d)

Group Company 2017 2016 2017 2016 RM RM RM RM

a) Subsidiaries :

Dividend income - - 20,000,000 - Sale of finished goods and services 3,073,574 9,282,229 - - Infrastructural and external work 3,614,619 19,196,903 - - Sub-contractors costs 9,021,420 11,052,446 - - Supply of labour 5,839,000 4,489,027 5,581,482 4,440,429 Management fees received 2,940,000 3,540,000 2,940,000 3,540,000 Rental charges 3,008,083 3,545,567 1,187,736 1,187,736 Food allowance 732 4,754 - - Interest charges 7,141,016 7,636,695 4,474,491 2,712,212

b) Associates :

Sub-contractor costs 94,693,228 31,043,717 - - Supply of labour 1,254,017 246,511 - - Interest charges 1,291,318 1,710,606 - - Management fee charged 625,400 - - -

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

c) compensation of key management personnel :

i) Directors Group Company 2017 2016 2017 2016 RM RM RM RM

Salary 4,073,144 3,708,765 370,000 465,000 Other emoluments 2,512,909 1,964,560 381,624 434,836

ii) Other key management personnel Group Company 2017 2016 2017 2016 RM RM RM RM

Salary 4,425,339 4,799,058 2,542,000 2,408,000 Other emoluments 3,694,062 3,045,523 1,705,339 1,333,098

Other key management personnel comprise persons other than the directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.

For salaried key management personnel, the Group also make such contributions to the Employee Provident Fund (“EPF”) as required by law.

ANNUAL REPORT 2017 115 Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS

(a) Financial Risk Management Policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, market risk and foreign currency risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Chief Financial Officer. The audit committee provides independent oversight to the effectiveness of the risk management process.

The following section provides details regarding the Group and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and process for the management of these risks.

(i) market Risk

i) Interest Rate Risk

Interest rate risk is the risk that fair value or future cash flows of the Group and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group exposures to interest rate risk arises primarily from its loans and borrowings. The loans and borrowings are subject to fluctuation in the bank’s base lending rate.

The interest rate profile of the Group and the Company’s interest bearing financial instruments based on the carrying amounts as at the end of the reporting period is as follows :

Group Company 2017 2016 2017 2016 RM RM RM RM

Fixed rate instruments

Financial assets 162,582,485 184,985,320 164,869,522 158,489,507 Financial liabilities 11,456,055 7,264,498 - -

Floating rate instruments

Financial liabilities 91,150,699 164,234,205 - -

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Company do not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

An increase of 25 basis point at the end of the reporting period would have decreased profit before tax by the amount shown below and a decrease would have an equal but opposite effect. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

116 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS (Cont’d)

(a) Financial Risk Management Policies (cont’d)

(i) Market Risk (cont’d)

i) Interest Rate Risk (cont’d)

Cash flow sensitivity analysis for variable rate instruments (cont’d)

2017 2016 RM RM

Decrease in profit before taxation 220,574 410,586

ii) Equity Price Risk

Market price is the risk that the fair value future cash flows of the Group and the Company financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group and the Company do not have any quoted equity investments and hence is not exposed to equity price risk.

(ii) credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances) the Group and the Company minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group and the Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group and the Company trades only with recognised and creditworthy third parties. It is the Group and the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group and the Company’s exposure to bad debts is not significant.

Exposure to credit risk

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 with positive fair values.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 20.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 20. Deposits with banks and other financial institutions that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that either past due or impaired is disclosed in Note 20.

ANNUAL REPORT 2017 117 Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS (CONT’D)

(a) Financial Risk Management Policies (cont’d)

(ii) credit risk (cont’d)

Financial guarantees

The Group provides unsecured financial guarantees to banks in respect of borrowing facilities granted to certain subsidiaries. The Group monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.

Intercompany balances

The Company provides advances to its subsidiaries. The Company monitors the results of the subsidiaries regularly.

The maximum exposure to credit risk is represented by its carrying amount in the Company’s statement of financial position.

As at the end of the reporting period, there was no indication that the advances to those subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to its subsidiaries.

(iii) Liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the financial support from related companies.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2017 RM On demand or within One to Over five one year five years years Total Group RM RM RM RM

Financial liabilities :

Trade and other payables 241,405,602 - - 241,405,602 Other current liabilities 58,988,289 - - 58,988,289 Loans and borrowings 96,420,682 6,186,072 - 102,606,754 Total undiscounted financial liabilities 396,814,573 6,186,072 - 403,000,645

118 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS (CONT’D)

(a) Financial Risk Management Policies (cont’d)

(iii) Liquidity risk (cont’d)

Analysis of financial instruments by remaining contractual maturities (cont’d)

2017 RM On demand or within One to Over five one year five years years Total Company RM RM RM RM

Financial liabilities :

Trade and other payables 1,615,611 - - 1,615,611 Other current liabilities - - - - Loans and borrowings - - - - Total undiscounted financial liabilities 1,615,611 - - 1,615,611

2016 RM On demand or within One to Over five one year five years years Total Group RM RM RM RM

Financial liabilities :

Trade and other payables 205,901,736 - - 205,901,736 Other current liabilities 60,709,733 - - 60,709,733 Loans and borrowings 168,340,096 3,158,607 - 171,498,703 Total undiscounted financial liabilities 434,951,565 3,158,607 - 438,110,172

2016 RM On demand or within One to Over five one year five years years Total Company RM RM RM RM

Financial liabilities :

Trade and other payables 2,127,839 - - 2,127,839 Other current liabilities - - - - Loans and borrowings - - - - Total undiscounted financial liabilities 2,127,839 - - 2,127,839

ANNUAL REPORT 2017 119 Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS (CONT’D)

(a) Financial Risk Management Policies (cont’d)

(iv) Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in foreign exchange rates.

The Company has transactional currency exposure arising from advances to subsidiary that are denominated in a currency other than the respective functional currency of Company. The Group and Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. The currencies giving rise to this risk are primarily USD Dollar (“USD”), Euro Dollar (“EURO”), Australian Dollar (“AUD”) and Singapore Dollar (“SGD”).

|------Denominated in ------| -Denominated in- Group Company USD EURO SGD AUD RM RM RM RM

2017

Other receivables - - - 105,218,701 Cash and bank balances 195,884 - 259,077 4,291 Net exposure 195,884 - 259,077 105,222,992

2016

Other receivables - - - 103,782,399 Cash and bank balances 6,777 34,385 285,733 5,029 Net exposure 6,777 34,385 285,733 103,787,428

Sensitivity analysis for foreign currency risk

Below demonstrates the sensitivity to a reasonably possible change in the foreign currency exchange rates against Ringgit Malaysia, with all other variables held constant, of the Group’s and Company’s profit before taxation. A 10% strengthening of the RM against the following currencies at the end of the reporting period would have increased profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect.

Group Company 2017 2016 2017 2016 RM RM RM RM

AUD 429 503 10,521,870 10,378,743 USD 19,588 678 - - EURO - 3,438 - - SGD 25,908 28,573 - - Increase in profit before taxation 45,925 33,192 10,521,870 10,378,743

120 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS (CONT’D)

(b) classification of Financial Instruments

The following tables provide an analysis of financial instruments categorised as follows:

(i) Loans and receivables (L & R);

(ii) Fair value through profit or loss (FVTPL) - Held for trading (HFT); and

(iii) Financial liabilities measured at amortised cost (FL).

Total FVTPL carrying FL L & R - HFT amount RM RM RM RM

2017 Group

Financial assets

Investment in associates - 13,759,091 - 13,759,091 Other investments - 32,034,271 - 32,034,271 Trade and other receivables - 297,941,445 - 297,941,445 Other current assets - 42,637,359 - 42,637,359 Cash and bank balances - 220,433,094 - 220,433,094 - 606,805,260 - 606,805,260

2017

Group

Financial liabilities

Trade and other payables 241,405,602 - - 241,405,602 Other current liabilities 58,988,289 - - 58,988,289 Loans and borrowings 102,606,754 - - 102,606,754 403,000,645 - - 403,000,645

2017

Company

Financial assets

Investment in subsidiaries - 106,874,969 - 106,874,969 Other receivables - 158,026,484 - 158,026,484 Trade and other receivables - 19,232 - 19,232 Cash and bank balances - 7,058,717 - 7,058,717 - 271,979,402 - 271,979,402

ANNUAL REPORT 2017 121 Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS (CONT’D)

(b) classification of Financial Instruments (cont’d)

Total FVTPL carrying FL L & R - HFT amount RM RM RM RM

2017

Company

Financial liabilities

Trade and other payables 1,615,611 - - 1,615,611 Other current liabilities - - - - Loans and borrowings - - - - 1,615,611 - - 1,615,611

2016

Group

Financial assets

Investment in associates - 10,771,113 - 10,771,113 Other investments - 29,193,952 - 29,193,952 Trade and other receivables - 261,522,535 - 261,522,535 Other current assets - 55,734,062 - 55,734,062 Cash and bank balances - 233,820,288 - 233,820,288 - 591,041,950 - 591,041,950

2016

Group

Financial liabilities

Trade and other payables 205,901,736 - - 205,901,736 Other current liabilities 60,709,733 - - 60,709,733 Loans and borrowings 171,498,703 - - 171,498,703 438,110,172 - - 438,110,172

122 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

37. FINANCIAL INSTRUMENTS (CONT’D)

(b) classification of Financial Instruments (cont’d)

Total FVTPL carrying FL L & R - HFT amount RM RM RM RM

2016

Company

Financial assets

Investment in subsidiaries - 106,211,096 - 106,211,096 Other receivables - 151,814,204 - 151,814,204 Trade and other receivables - 18,985 - 18,985 Cash and bank balances - 6,796,525 - 6,796,525 - 264,840,810 - 264,840,810

2016

Company

Financial liabilities

Trade and other payables 2,127,839 - - 2,127,839 Other current liabilities - - - - Loans and borrowings - - - - 2,127,839 - - 2,127,839

(c) Fair Values of Financial Instruments

Fair value is defined as the amount for which the financial instruments could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.

The carrying amounts of financial instruments reported in the financial statements approximate their fair values.

38. caPITAL MANAGEMENT

The primary objective of the Group’s and the Company’s capital management is to ensure that they maintain a strong credit rating and healthy capital ratios in order to support their business and maximise shareholders’ value.

The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2017 and 31 December 2016.

The Group and the Company monitors capital using a gearing ratio, which is net cash divided by total capital plus net cash. The Group and the Company did not maintain specific policy on the capital management. The Group and the Company includes within net cash, loans and borrowings less cash and bank balances. Capital includes equity attributable to the owners of the Group and the Company less the fair value adjustment reserve.

ANNUAL REPORT 2017 123 Notes to the Financial Statements 31 December 2017 (cont’d)

38. caPITAL MANAGEMENT (cont’d)

Group Company 2017 2016 2017 2016 RM RM RM RM

Loans and borrowings 102,606,754 171,498,703 - - Less: Cash and bank balances (220,433,094) (233,820,288) (7,058,717) (6,796,525) Net cash (117,826,340) (62,321,585) (7,058,717) (6,796,525)

Total equity 406,016,582 385,493,143 271,840,944 264,720,256 Less: - Fair value adjustment reserve (2,226,943) (2,325,455) - - Total capital employed 403,789,639 383,167,688 271,840,944 264,720,256

Capital and net cash 521,615,979 445,489,273 278,899,661 271,516,781

Gearing ratio - - - -

39. SEGMENTAL INFORMATION

The Group’s reportable segments, as described below, are the Group’s strategic business units. The strategic business units offer different services and are managed separately because they require different marketing strategies. For each of the strategic business units, the Group’s Chief Executive Officer reviews internal management reports on at least a quarterly basis. Other business units are reported as ‘others’. The following summary describes the operations in each of the Group’s reportable segments :

* Construction activity * Property development

Performance is measured based on segment profit before tax, interest, depreciation and amortisation. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Segment assets

Segment asset is measured based on all assets (including goodwill) of a segment and is used to measure the return of assets of each segment.

124 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

39. SEGMENTAL INFORMATION (Cont’d)

Segment assets (cont’d)

Operating segment information for the current financial year is as follows :

Construction Property Consolidated activity development Others adjustments Total 2017 RM RM RM RM RM

REVENUE 740,259,131 31,426,694 31,181,612 (74,687,190) 728,180,247

PROFIT BEFORE TAX 47,970,423 4,334,636 (8,255,960) 2,888,543 46,937,642

SEGMENT ASSETS 582,266,190 220,302,458 14,305,172 - 816,873,820

2016

REVENUE 744,724,848 35,246,290 37,832,320 (63,962,943) 753,840,515

PROFIT BEFORE TAX 26,257,384 1,988,541 755,287 3,741,837 32,743,049

SEGMENT ASSETS 548,613,432 258,515,682 20,241,554 - 827,370,668

geographical Segments

2017 Malaysia Australia Brunei Cambodia Total RM RM RM RM RM

Revenue 682,634,348 12,683,553 32,862,346 - 728,180,247

Non Current Assets 82,927,686 35,161,712 874,937 - 118,964,335

2016

Revenue 716,319,238 5,347,396 32,173,881 - 753,840,515

Non Current Assets 82,186,100 39,323,624 1,311,493 - 122,821,217

Non current assets information presented above consist of the following items as presented in the consolidated statement of financial position.

2017 2016 RM RM

Property, plant and equipment 82,553,841 47,081,830 Properties held for development 12,068,603 51,388,319 Investment properties 24,341,891 24,341,891 Intangible assets - 9,177 118,964,335 122,821,217

ANNUAL REPORT 2017 125 Notes to the Financial Statements 31 December 2017 (cont’d)

39. SEGMENTAL INFORMATION (Cont’d)

geographical Segments (cont’d)

The construction activity and property development segments are managed on a worldwide basis. In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments (including investments in associates and deferred tax assets).

40. SIGNIFICANT EVENTS

a) New Project Secured

(i) Package V205 : Construction and Completion of Viaduct Guideway

The Company’s wholly owned subsidiary, Trans Resources Corporation Sdn. Bhd. (“TRC”) had on 10 March 2017, accepted the award from Mass Rapid Transit Corporation Sdn. Bhd., in relation to the contract known “Package V205: Construction and Completion of Viaduct Guideway and Other Associated Works from Kampung Muhibbah to Serdang Raya for Projek Mass Rapid Transit Laluan 2: Sungai Buloh-Serdang-Putrajaya (SSP) (Contract No: MRTCORP/KVMRT-SSP/V205/CW/001/01/2017)” for a contract sum of RM858,180,000.

(ii) Package TD2: Construction and Completion of Johan Setia Depot

TRC also had on 29 August 2017, accepted the award from Prasarana Malaysia Berhad, in relation to the contract known as “Package TD2 - Construction and Completion of Johan Setia Depot (Phase 2) and Associated Works for Construction and Completion of Light Rail Transit Line 3 (LRT 3) from Bandar Utama to Johan Setia (Contract No.: PRASARANA/GCS/CTT/2.0673/2017)” for a contract sum of RM760,550,000 (inclusive of 6% GST).

(iii) Package DPT 201: Construction and Completion of Serdang Maintenance Depot

Further, Consortium KKM-TRC had on 12 September 2017 accepted the Award from Mass Rapid Transit Corporation Sdn. Bhd. in relation to the contract known as “Package DPT 201: Construction and Completion of Serdang Maintenance Depot, External Works and Other Associated Works for Project Mass Rapid Transit Laluan 2: Sungai Buloh-Serdang-Putrajaya (SSP) (Contract No.: MRTCORP/KVMRT-SSP/DPT201/CW/023/08/2017)” for a contract sum of RM348,300,000).

Consortium KKM-TRC is an unincorporated joint venture between Konsortium Kontraktor Melayu Sdn. Bhd. and TRC.

b) Disposal of Landed Property

During the year, the wholly-owned subsidiary of the Company, TRC (Aust) Pty Ltd had on 14 July 2017 entered into a Contract of Sale of Real Estate with Forza 588 Swan Street Pty Ltd for the disposal of an identified landed property for a consideration of AUD9,657,000 (RM32,368,333). The Group reported a gain on the disposal of RM4,397,505.

126 TRC SYNERGY BERHAD Notes to the Financial Statements 31 December 2017 (cont’d)

41. caPITAL COMMITMENT

The Group has the following commitments for the acquisition of the property, plant and equipment :

Group 2017 2016 RM RM

Approved and contracted for :

Building under construction 145,654,705 - Plant and machinery 2,821,000 - 148,475,705 -

42. LITIGATIONS

Save as disclosed below, the Company and its subsidiary companies are not involved in any material litigation, either as plaintiff or defendant, claims or arbitration and the Board does not have knowledge of any proceedings, pending or threatened against the Company and its subsidiary companies, or of any facts likely to give rise to any proceedings which might materially and adversely affect the financial position and business of the Company and/or its subsidiaries companies:-

(i) Arbitration between the Company’s subsidiary, Trans Resources Corporation Sdn. Bhd. (“TRC”) and Carmichael Asia Sdn. Bhd. (“Carmichael”)

On 18 August 2008, TRC, the wholly owned subsidiary of the Company, entered into a contract with Carmichael whereby TRC employed Carmichael for the manufacturer/procurement of two (2) units of fire-fighting engines (“Fire Fighting Units”) for the Sultan Mahmud Airport situated in Kuala Terengganu (“the Agreement”). Carmichael was to deliver the Fire Fighting Units by January 2009. However, they were only able to supply one (1) Fire Fighting Units. This has caused TRC to sources and obtain supply from another supplier, CME Edaran Sdn. Bhd., at a higher cost. TRC is claiming an amount of RM2,209,335 from Carmichael for breach of contract due to Carmichael’s failure to deliver the remaining Fire Fighting Unit within the prescribed date, resulting in TRC incurring additional cost for engaging another supplier. Carmichael is disputing the amount and both parties have agreed to proceed with the matter by way of arbitration as provided for in clause 25 of the Agreement.

The Arbitration process has just been completed whereby the Arbitrator has handed down an award in favour of TRC. Carmichael was requested to pay TRC RM2,209,335 together with cost of RM46,552.

In relation thereto, the necessary legal actions have been initiated in the High Court of Kuala Lumpur since early 2013 against Carmichael for the recovery of the abovementioned outstanding amount.

In April 2017, the High Court dismissed the Garnishee’s (one of Carmichael’s Director) appeal against the Garnishee Order that has been made against her. In relation thereto, the Garnishee further appealed the matter to the Appeal Court. The Appeal Court had on 25 January 2018 overturned the High Court’s decision and set aside the Garnishee Order against the Director. TRC will appeal the matter to the Federal Court.

(ii) The Brunei Economic Development Board

TRC had jointly with Swee Sdn. Bhd. undertake a Modernization of Brunei International Airport Terminal project. The said project was duly completed and handed over in 2015. However, on 16 March 2018 TRC served an Originating Summon issued by the High Court of Brunei Darussalam to recover BND13.0 million (approximately RM38.23 million) together with interest and costs to The Brunei Economic Development Board.

ANNUAL REPORT 2017 127 List of Properties

Net Book Value 31 December Description/ Approx. Age Land Area/ 2017 Date of No Location Tenure Existing Use of Buildings Build Up Area RM Valuation

1 Lot No.3626 60-year 4-storey 19 years 2,214.2 sq ft/ 961,892 30/11/2009 Section 16 leasehold shop/office 8,856.8 sq ft Kuching Central expiring Land District 18/4/2059 Sarawak

2 Lot No.PT19447 99-year Agriculture - 9.516 acres 452,873 21/9/2000 Mukim of Ampangan leasehold Land District of Seremban expiring Negeri Sembilan 18/9/2095

3 Developer's Parcel Freehold First and 27 years 1,760.0 sq ft 469,644 30/11/2009 No. 47(218) Second each First and Second Floors of Floors of an Intermediate 4-storey 4-storey shop/office building shop/office Taman Melawati Metro 1 Phase 4 Town Centre Selangor

4 4 Units of Apartments Leasehold Apartments 12 1/2 years Varying from 451,000 20/07/2011 Idaman Senibong Apartment expiring 808.0 sq ft, Taman Bayu Senibong 21/1/2097 815.0 sq ft Johor Bahru, Johor & 868.0 sq ft

5 HS(D) 346773 PTD 166642 Freehold Double storey 14 years 239.6606 251,658 - Mukim of Plentung terrace sq metres District of Johor Bahru, State of Johor (together with a double storey terrace house erected thereon)

6 A part of HS(D) 310780 Freehold Residential - 27.636 acres 11,816,945 - PTD 158256 land Mukim of Plentong, District of Johor Bahru, State of Johor

7 Mukim 2908, Lot 2265 Freehold Agriculture - 2.6052 1,080,156 - Mukim Dengkil land hectares Daerah Sepang Selangor Darul Ehsan

128 TRC SYNERGY BERHAD List of Properties (cont’d)

Net Book Value 31 December Description/ Approx. Age Land Area/ 2017 Date of No Location Tenure Existing Use of Buildings Build Up Area RM Valuation

8 Shop Office & Freehold Shop Office 9 years Varying from 23,340,564 14/10/2013 Corporate Building 1121sq TRC Business Centre ft,1209 sq Jalan Andaman Utama ft, 1319 sq 68000 Ampang ft,1344 sq ft, Selangor Darul Ehsan 1370 sq ft, 1469 sq ft,1533 sq ft,1775sq ft & 2922.71 sq ft

9 Geran 314188, Lot 73971 Freehold - 4 years 0.6946 6,429,745 - Mukim Sungai Buloh hectares Daerah Petaling Negeri Selangor

10 588,Swan Street Freehold 5 Storey - 3,214 35,159,794 Under Richmond,Melbourne hotel with an sq meters construction Australia additional two (site area) levels of basement car park

11 4 units of office building Leasehold Office - 1158 sq ft 1,207,032 Under Impian Senibong Residensi expiring Building each construction Taman Bayu Senibong 21/1/2097 Johor Bahru, Johor

ANNUAL REPORT 2017 129 Analysis of Shareholdings as at 30 March 2018

Authorised Share Capital : RM 500,000,000.00 divided into 1,000,000,000 shares of RM0.50 each Fully Paid-Up Capital : RM 240,248,551.50 Issued Share Capital : 480,497,103 shares Class of Shares : Ordinary Shares of RM0.50 each Voting Rights : One Vote Per Ordinary Share No. of Shareholders : 3,256

DISTRIBUTION OF SHAREHOLDINGS (As at 30 March 2018)

Category No.of Holders % No.of Shares %

Less than 100 114 3.50 4,474 0.00 100 - 1,000 289 8.88 155,828 0.03 1,001 - 10,000 1,561 47.94 9,143,035 1.90 10,001 - 100,000 1,112 34.15 33,200,841 6.91 100,001 and less than 5% of issued shares 175 5.37 204,148,072 42.49 5% and above of the issued shares 5 0.15 233,844,853 48.67

Total 3,256 100.00 480,497,103 100.00

LIST OF SUBSTANTIAL SHAREHOLDERS (As at 30 March 2018)

Direct Indirect No. Name No. of Shares % No. of Shares %

1 TRC Capital Sdn Bhd 59,553,600 12.39 - - 2 Kolektif Aman Sdn Bhd 58,521,600 12.18 - - 3 Dato’ Leong Kam Heng 47,971,947 9.98 - - 4 Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin 47,531,517 9.89 118,075,200* 24.57 5 Khoo Tew Choon 39,374,372 8.19 - - 6 Lembaga Tabung Haji 36,696,852 7.64 - -

* Deemed interested by virtue of his shareholdings in Kolektif Aman Sdn Bhd and TRC Capital Sdn Bhd

DIRECTORS’ INTEREST IN SHARES (As at 30 March 2018)

Direct Indirect No. Name No. of Shares % No. of Shares %

1 Tan Sri Dato’ Sri Sufri Bin Hj Mohd Zin 47,531,517 9.89 118,075,200* 24.57 2 Dato’ Abdul Aziz Bin Mohamad 13,658,217 2.84 118,075,200* 24.57 3 Siti Sarlina Binti Abdul Rahman (Alternate Director 7,000 0.00 - - to Dato’ Abdul Aziz Bin Mohamad)

* Deemed interested by virtue of his shareholdings in Kolektif Aman Sdn Bhd and TRC Capital Sdn Bhd

130 TRC SYNERGY BERHAD Analysis of Shareholdings as at 30 March 2018 (cont’d)

LIST OF 30 LARGEST SHAREHOLDERS (As at 30 March 2018)

NO NAME OF SHAREHOLDER SHARES %

1. KENANGA NOMINEES (TEMPATAN) SDN BHD 59,553,600 12.39 PLEDGED SECURITIES ACCOUNT FOR TRC CAPITAL SDN BHD

2. KENANGA NOMINEES (TEMPATAN) SDN BHD 58,521,600 12.18 PLEDGED SECURITIES ACCOUNT FOR KOLEKTIF AMAN SDN BHD

3. KENANGA NOMINEES (TEMPATAN) SDN BHD 42,638,397 8.87 PLEDGED SECURITIES ACCOUNT FOR SUFRI BIN MHD ZIN

4. LEMBAGA TABUNG HAJI 36,696,852 7.64

5. KENANGA NOMINEES (TEMPATAN) SDN BHD 36,434,404 7.58 PLEDGED SECURITIES ACCOUNT FOR KHOO TEW CHOON

6. KENANGA NOMINEES (TEMPATAN) SDN BHD 23,546,715 4.90 PLEDGED SECURITIES ACCOUNT FOR LEONG KAM HENG

7. KENANGA NOMINEES (TEMPATAN) SDN BHD 18,941,336 3.94 PLEDGED SECURITIES ACCOUNT FOR YAP YON TAI

8. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 17,376,800 3.62 PLEDGED SECURITIES ACCOUNT FOR LEONG KAM HENG

9. CIMB GROUP NOMINEES (TEMPATAN) SDN BHD 11,112,700 2.31 CIMB COMMERCE TRUSTEES BERHAD – KENANGA GROWTH FUND

10. ABDUL AZIZ BIN MOHAMAD 10,789,536 2.25

11. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 10,269,500 2.14 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (KENANGA)

12. CIMB ISLAMIC NOMINEES (TEMPATAN) SDN BHD 7,300,200 1.52 CIMB ISLAMIC TRUSTEE BERHAD – KENANGA SYARIAH GROWTH FUND

13. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 6,386,600 1.33 EMPLOYEES PROVIDENT FUND BOARD

14. KENANGA NOMINEES (TEMPATAN) SDN BHD 6,000,000 1.25 PLEDGED SECURITIES ACCOUNT FOR MUHAMAD SHAHAIZI BIN ABDUL HAI

15. NGIAM BUEY BUEY 4,620,297 0.96

16. KHOO TENG SAN 4,415,147 0.92

17. MAYBANK NOMINEES (TEMPATAN) SDN BHD 3,810,000 0.79 PLEDGED SECURITIES ACCOUNT FOR LIM BOON HOOI

ANNUAL REPORT 2017 131 Analysis of Shareholdings as at 30 March 2018 (cont’d)

LIST OF 30 LARGEST SHAREHOLDERS (As at 30 March 2018)

NO NAME OF SHAREHOLDER SHARES %

18. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 2,733,120 0.57 PLEDGED SECRITIES ACCOUNT FOR SUFRI BIN MHD ZIN (473402)

19. LIM CHIN SENG 2,450,000 0.51

20. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 2,407,968 0.50 PLEDGED SECURITIES ACCOUNT FOR LEONG KAM HENG (473525)

21. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 2,365,800 0.49 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (KNGA SML CAP FD)

22. HLB NOMINEES (TEMPATAN) SDN BHD 2,289,680 0.48 PLEDGED SECURITIES ACCOUNT FOR KHOO TEW CHOON

23. CIMB GROUP NOMINEES (TEMPATA) SDN BHD 2,241,200 0.47 CIMB COMMERCE TRUSTEE BERHAD – KENANGA MALAYSIAN INC FUND

24. SUFRI BIN MHD ZIN 2,160,000 0.45

25. HLB NOMINEES (TEMPATAN) SDN BHD 2,103,344 0.44 PLEDGED SECURITIES ACCOUNT FOR LEONG KAM HENG

26. CARTABAN NOMINEES (ASING) SDN BHD 2,030,000 0.42 BBH ABD CO BOSTON FOR NUMERIC EMERGING MARKETS SMALL CAP CORE OFFSHORE FUND LTD

27. HLB NOMINEES (TEMPATAN) SDN BHD 2,028,000 0.42 PLEDGED SECURITIES ACCOUNT FOR LEE CHIAH CHEANG

28. CIMSEC NOMINEES (TEMPATAN) SDN BHD 1,887,120 0.39 CIMB BANK FOR LEONG KAM HENG (M28001)

29. ABDUL AZIZ BIN MOHAMAD 1,868,681 0.39

30. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 1,519,900 0.32 PLEDGED SECURITIES ACCOUNT FOR KHOO TENG SAN (473523)

TOTAL 386,498,497 80.44

132 TRC SYNERGY BERHAD Notice of Twenty-First Annual General Meeting

NOTICE IS HEREBY GIVEN that the Twenty First Annual General Meeting of the Company will be held at Do@M (Mezzanine Floor), Sheraton Imperial Kuala Lumpur Hotel, Jalan Sultan Ismail, 50250 Kuala Lumpur on Tuesday, the 15th day of May, 2018 at 12:00 p.m. for the purpose of transacting the following businesses:-

AGENDA

1 To receive and adopt the Audited Financial Statements, Report of the Directors and Report of the (Please refer to Auditors thereon for the year ended 31 December 2017. Note 1)

2 To approve the payment of first and final single tier dividend of 2.8 sen per share for the year ended 31 Ordinary December 2017. (Please refer to Note 3) Resolution 1

3 To approve the payment of Directors’ Fees in respect of the financial year ended 31 December 2017. Ordinary (Please refer to Note 4) Resolution 2

4 To re-elect YBhg Tan Sri Dato’ Sri Sufri bin Mohd Zin who shall retire as Director of the Company Ordinary pursuant to Articles 84 of the Company’s Articles of Association. Resolution 3

5 To re-elect YBhg Tun Jeanne binti Abdullah who shall retire as Director of the Company pursuant to Ordinary Articles 91 of the Company’s Articles of Association. Resolution 4

6 To re-appoint Messrs AljeffriDean as Auditors of the Company to hold office until the conclusion of the Ordinary next Annual General Meeting and to authorise the Directors to fix their remuneration. Resolution 5

SPECIAL BUSINESS

To consider and if thought fit, to pass the following ordinary resolution, with or without modification:-

7 Authority to allot shares pursuant to Section 75 of the Companies Act, 2016 (Please refer to Note 5) “THAT subject always to the Companies Act, 2016 (“the Act”), the Articles of Association of the Company and approvals from Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other Ordinary governmental/regulatory authorities, the Directors of the Company be and are hereby empowered, Resolution 6 pursuant to Section 75 of the Act, to allot shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors of the Company may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company for the time being AND THAT the Directors of the Company be and are hereby empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Securities AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

8 Proposed renewal of authority for the company to purchase its own shares (Please refer to Note 6) “THAT subject to compliance with all applicable rules, regulations and orders made pursuant to the Companies Act, 2016 (“Act”), provisions in the Company’s Memorandum and Articles of Association, the Ordinary Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant Resolution 7 authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of the company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company PROVIDED THAT:-

(1) the aggregate number of shares purchased does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company as quoted on Bursa Securities as at the point of purchase;

ANNUAL REPORT 2017 133 Notice of Twenty-First Annual General Meeting (cont’d)

(2) the maximum fund to be allocated by the Company for the purpose of purchasing such number of ordinary shares shall not exceed the retained profit account of the Company. As at the financial year ended 31 December 2017, the audited retained profit of the Company stood at RM31,384,274.000;

(3) The renewal of authority conferred by this resolution will commence immediately upon passing of this resolution and will continue to be in force until:-

(a) at the conclusion of the next AGM of the Company following the general meeting in which the authorization is obtained, at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting.

whichever occurs first;

AND THAT upon completion of the purchase(s) of the ordinary shares of the Company, the Directors of the Company be and are hereby authorised to deal with the ordinary shares so purchased in the following manners:-

(a) to cancel the ordinary shares so purchased; or

(b) to retain the ordinary shares so purchased as treasury shares for distribution as dividend to shareholders and/or resell on Bursa Securities or subsequently cancelled; or

(c) to retain part of the ordinary shares so purchased as treasury shares and cancel the remainder; and

(d) in any other manner prescribed by the Act, rules, regulations and orders made pursuant to the Act, the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force.

AND THAT the Directors of the Company be and are hereby authorised to act and to take all such steps as they may deem necessary or expedient in order to implement, finalise and give full effect to the aforesaid share buy-back with full powers to assent to any conditions, modifications, variations, and/ or amendments as may be required or imposed by the relevant authorities and to do all such acts and things (including executing all documents) as the Board may deem fit and expedient in the best interest of the Company.”

9 To transact any other business of which due notice shall be given in accordance with the Articles of Association of the Company and the Companies Act, 2016.

134 TRC SYNERGY BERHAD Notice of Twenty-First Annual General Meeting (cont’d)

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN, that a first and final dividend of 2.8 sen per share in respect of the financial year ended 31 December 2017 will be paid on 14 June 2018 to shareholders whose names appear on the Company’s Register of Depositors on 31 May 2018.

A Depositor shall qualify for entitlement to the dividend only in respect:-

A Depositor shall qualify for entitlement to the dividend only in respect:- a) Shares transferred into the Depositor’s Securities Account before 4.00pm on 31 May 2018 in respect of ordinary transfers; and b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

ABDUL AZIZ MOHAMED (LS 007370) Secretary

Selangor Darul Ehsan 18th April 2018

Notes:

1. audited Financial Statements for the Year Ended 31 December 2017

This Agenda item is meant for discussion only as the provision of Section 340(1)(a) of the Companies Act, 2016 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting by shareholders of the Company.

2. appointment of Proxies

a. A proxy may but need not be a member of the Company. b. To be valid the proxy form duly completed must be deposited at the registered office of the Company not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. c. A member holding one thousand (1,000) ordinary shares or less may appoint only one (1) proxy to attend and vote at the meeting. d. A member holding more than one thousand (1,000) ordinary shares may appoint up to two (2) proxies to attend and vote at the meeting. e. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. f. Where a member is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. g. If the appointer is a corporation, the proxy form must be executed under its Common Seal or under the hand of its attorney. h. Only members whose names appears in the Record of Depositors as at 10 May 2018 will be entitled to attend and vote at the meeting.

3. Dividend Payment (Ordinary Resolution No. 1)

With reference to Section 131 of the Companies Act 2016, a company may only make a distribution to the shareholders out of profits of the company available if the company is solvent. On 27 March 2018 the Board of Directors had considered the amount of dividend and decided to recommend the same for the shareholders’ approval.

ANNUAL REPORT 2017 135 Notice of Twenty-First Annual General Meeting (cont’d)

4. Directors Fees and Benefits (Ordinary Resolution No. 2)

Section 230(1) of the Companies Act 2016 provides amongst others that the fees of the directors and any benefits payable to the directors of a listed company shall be approved at a general meeting. During the financial year ended 31 December 2017, the Company has paid RM122,250.00 to the Non-Executive Directors as set out in the table below:-

Non-Executive Chairman Chairman Allowance - RM 60,000.00 Directors Fees - RM 38,000.00 Meeting Allowances - RM 1,250.00 Non-Executive Directors Directors Fees - RM119,000.00 Meeting Allowances - RM 3,250.00 TOTAL - RM221,500.00

5. authority for allotment of shares (Ordinary Resolution No. 6)

The proposed Ordinary Resolution 6 is a renewal of the General Mandate for the Directors to allot shares pursuant to Section 75 of the Companies Act, 2016.

The proposed Ordinary Resolution 6, if passed, will authorize the Directors of the Company, from the date of the above Annual General Meeting, to allot shares up to ten per centum (10%) of the issued and paid-up capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company. This authority, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

As at the date of this Notice, no new shares in the Company were allotted pursuant to the authority granted to the Directors at the Twentieth Annual General Meeting held on 24 May 2017 and which will lapse at the conclusion of the Twenty First Annual General Meeting to be held on 15 May 2018.

The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

The rationale for this resolution is to eliminate the need to convene separate general meeting(s) from time to time to seek Shareholder approval as and when the Company issues new shares and thereby reducing administrative time and costs associated with the convening of such meeting(s).

6. Proposed renewal of authority for the Company to purchase its own shares (Ordinary Resolution No. 7)

The proposed adoption of the Ordinary Resolution 7 is to renew the authority granted by the shareholders of the Company at the Annual General Meeting held on 24 May 2017 to empower the Directors of the Company to purchase not more than 10% of the issued and paid-up share capital of the Company for the time being, for such purposes as they consider would be in the best interest of the Company. This authority, unless revoked or varied at a general meeting will expire at the conclusion of the next Annual General Meeting of the Company. Further information is set out in the Share Buy-Back Statement dated 18 April 2018 which is dispatched together with the Company’s 2017 Annual Report.

136 TRC SYNERGY BERHAD Statement Accompanying Notice of Annual General Meeting

FURTHER DETAILS OF INDIVIDUALS WHO ARE STANDING FOR ELECTION

No Directors will stand for election during the twenty-first Annual General Meeting.

STATEMENT RELATING TO GENERAL MANDATE FOR ISSUANCE OF SECURITIES

The proposed adoption of Ordinary Resolution No 6 as detailed out in the Notice of Meeting is for the purpose of seeking a renewal for the general mandate to empower the Directors of the Company pursuant to Section 75 of the Companies Act, 2016, from the date of the above Meeting, to allot ordinary shares of not more than ten percent (10%) from the unissued share capital of the Company for such purposes as the Directors of the Company consider would be in the interest of the Company.

This authority will, unless revoked or varied at a General Meeting, expire at the conclusion of the next Annual General Meeting of the Company. This authority will provide flexibility and enable the Directors to take swift action for allotment of shares for any possible fund raising activities, including but not limited to further placement of shares for purpose of funding future investment project(s), working capital and/or acquisition(s) and to avoid delay and cost in convening general meetings to approve such issue of shares.

As at the date of this Notice, no new shares in the Company were issued under the provision of the general mandate granted to the Directors at the Twentieth Annual General Meeting held on 24 May 2017 and which will lapse at the conclusion of the Twenty-First Annual General Meeting to be held on 15 May 2018. Hence, no proceeds were raised therefrom.

ANNUAL REPORT 2017 137 PROXY FORM TRC Synergy Berhad (413192-D) No. of Ordinary Shares held (Incorporated in Malaysia)

I/We, of

being a member/members of the above-named Company, hereby appoint of

or failing whom, of

as my/our proxy to vote for me/us and on my/our behalf at the Twenty-First Annual General Meeting of the Company, to be held at Do@M (Mezzanine Floor), Sheraton Imperial Kuala Lumpur Hotel, Jalan Sultan Ismail, 50250 Kuala Lumpur on Tuesday, 15 May 2018 at 12:00 p.m and at every adjournment thereof.

I/We direct my/our proxy to vote for or against the resolutions to be tabled at the Twenty-First Annual General Meeting as hereunder indicated.

RESOLUTIONS FOR AGAINST ORDINARY To approve the payment of first and final single tier dividend of 2.8 sen RESOLUTION 1 per share for the year ended 31 December 2017. ORDINARY To approve the payment of Directors’ Fees in respect of the financial year ended RESOLUTION 2 31 December 2017. ORDINARY To re-elect YBhg Tan Sri Dato’ Sri Sufri bin Mohd Zin as Director of the Company RESOLUTION 3 ORDINARY To re-elect YBhg Tun Jeanne binti Abdullah as Director of the Company RESOLUTION 4 ORDINARY To reappoint Messrs AljeffriDean as the Auditors of the Company and to authorise RESOLUTION 5 the Directors to fix their remuneration ORDINARY To grant authority to the Directors to allot and issue shares pursuant to Section 75 RESOLUTION 6 of the Companies Act, 2016 ORDINARY To approve the Proposed Renewal of Authority for Share Buy-Back. RESOLUTION 7

(Please indicate with an X in the space provided how you wish your vote to be cast on the resolution specified in the Notice of the Twenty-First Annual General Meeting. If this form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain from voting at his/her discretion.)

Dated this:

Signature/Common Seal

Notes : 1. A proxy may but need not be a member of the Company. 2. To be valid the proxy form duly completed must be deposited at the registered office of the Company not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. 3. A member holding one thousand (1,000) ordinary shares or less may appoint only one (1) proxy to attend and vote at the meeting. 4. A member holding more than one thousand (1,000) ordinary shares may appoint up to two (2) proxies to attend and vote at the meeting. 5. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 6. Where a member is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. 7. If the appointer is a corporation, the proxy form must be executed under its Common Seal or under the hand of its attorney. 8. Only members whose names appears in the Record of Depositors as at 10 May 2018 will be entitled to attend and vote at the meeting. Fold this flap for sealing

Then fold here

AFFIX STAMP

The Company secretary

TRC Synergy Berhad (413192-D) TRC Business Centre Jalan Andaman Utama 68000 Ampang, Selangor

1st fold here TRC SYNERGY BERHAD (413192-D)

As one with the

TRC SYNERGY BERHAD NATION (413192-D) | ANNUAL REPORT 2017

Mata Air (2016) by Jalani Abu Hassan

TRC SYNERGY BERHAD (413192-D)

TRC Business Centre Jalan Andaman Utama 68000 Ampang, Selangor ANNUAL REPORT Tel: 603-4103 8000 Fax: 603-4108 7016 www.trc.com.my www.trc.com.my