Embracing New Challenges

t por e R ual 2019 Ann Embracing New Challenges

ANNUAL REPORT 2019 Embracing 2019 New Annual Report Challenges

We aim to provide suitable solutions to new challenges. CONTENTS 3 Notice of Annual General Meeting 7 Corporate Information 9 Corporate Structure 10 Profile of Directors 14 Profile of Key Senior Management 15 Group Financial Highlights 17 Management Discussion & Analysis 21 Corporate Governance Overview Statement 29 Statement on Risk Management & Internal Control Statement 34 Audit Committee Report 36 Sustainability Statement 55 Financial Statements 151 List of Properties 154 Analysis of Shareholdings

• Proxy Form ANNUAL REPORT 2019 3 NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 25th Annual General Meeting of SHL Consolidated Bhd. (the “Company”) will be held at Ballroom 1, Level 1, Corus Hotel Kuala Lumpur, Jalan Ampang, 50450 Kuala Lumpur, on Thursday, 29 August 2019 at 11.00 a.m. for the purpose of transacting the following businesses:-

AS ORDINARY BUSINESS (Please refer to 1. To receive the Audited Financial Statements for the financial year ended 31 March Explanatory 2019 together with the Reports of the Directors and the Auditors thereon. Note 1)

2. To approve a Final Dividend of 8 sen per share in respect of the financial year ended Resolution 1 31 March 2019.

3. To approve the payment of Directors’ fees for the financial year ended 31 March 2019. Resolution 2

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

i. Dato' Sri Yap Teiong Choon Resolution 3 ii. Wong Tiek Fong Resolution 4 iii. Au Lai Koong Resolution 5

5. To re-appoint Messrs Khoo Wong & Chan as Auditors of the Company for the financial Resolution 6 year ending 31 March 2020 and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS

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

Ordinary Resolutions:

6. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue Resolution 7 or Trading Nature (Please refer to “THAT subject always to Bursa Malaysia Securities Berhad’s Main Market Listing Explanatory Requirements, approval be and is hereby given to the Company and its subsidiaries Note 2) (SHL Group) to enter into recurrent related party transactions of a revenue or trading nature with those related parties as set out in Section 2.3, Part A of the Circular to Shareholders dated 31 July 2019, which are necessary for the day to day operations in the ordinary course of business and are carried out at arms’ length basis on normal commercial terms of the SHL Group on terms not more favourable to the Related Parties than those generally available to the public and are not detrimental to minority shareholders of the Company and such approval shall continue to be in force until:

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

whichever is the earlier,

AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate.” 4 SHL CONSOLIDATED BHD NOTICE OF ANNUAL GENERAL MEETING (cont’d)

7. Authority to Issue Shares Pursuant to Sections 75 and 76 of the Companies Act 2016 Resolution 8 (Please “THAT pursuant to Sections 75 and 76 of the Companies Act 2016, the Articles of refer to Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Explanatory Securities Berhad and the approvals of the relevant governmental/ regulatory Note 3) authorities, where such approval is required, the Directors be and are hereby authorised to issue and allot shares in the Company to such persons, at any time, and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed 10% of the total number of issued shares of the Company for the time being AND THAT the Directors be and also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.”

8. Proposed Adoption of New Constitution of the Company (“Proposed Adoption of New Special Constitution”) Resolution

“THAT the existing Memorandum and Articles of Association of the Company be deleted in its entirety and that the new Constitution as set out in Appendix II of the Company’s Circular to Shareholder dated 31 July 2019 be and is hereby adopted as the new Constitution of the Company.

AND THAT the Board of Directors be and is hereby authorised to do all such acts and things (including executing such documents as may be required) in the said connection and to delegate all or any of the powers herein vested in them to any Director(s) or any officer(s) of the Company to give effect to the Proposed Adoption of New Constitution with full power to assent to any conditions, variations, modifications and/or amendments in any manner as may be required or permitted by the relevant regulatory authorities.”

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

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT the Final Dividend of 8 sen per share in respect of the financial year ended 31 March 2019, if approved, will be paid on 4 October 2019 to depositors registered in the Record of Depositors of the Company on 20 September 2019.

A Depositor shall qualify for entitlement to the dividend only in respect of: -

i. Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 20 September 2019 in respect of transfers; and

ii. Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

By Order of the Board

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

Kuala Lumpur 31 July 2019 ANNUAL REPORT 2019 5 NOTICE OF ANNUAL GENERAL MEETING (cont’d)

EXPLANATORY NOTES:

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

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

2. Item 6 of the Agenda: Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

The Ordinary Resolution 7 is to seek a fresh shareholders’ mandate for the recurrent related party transactions comprising the shareholders’ mandate which has been obtained on 29 August 2018 as well as additional recurrent related party transactions. Further information on the Proposed Shareholders’ Mandate is set out in the Circular to Shareholders dated 31 July 2019, which is despatched together with this Annual Report 2019.

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

i. The Ordinary Resolution 8 is to seek a fresh general mandate which will empower the Directors to issue shares in the Company up to an amount not exceeding in total ten percent (10%) of the issued capital of the Company for such purposes as the Directors consider would be in the best interest of the Company in order to avoid any delay and cost involved in convening a general meeting to approve such issue of shares. This authority, unless revoked or varied by the Company at a General Meeting, will expire at the conclusion of the next Annual General Meeting of the Company. ii. This general mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placement of shares, for purpose of funding current and/or future investment project(s), working capital and/or acquisitions as well as any strategic opportunities involving equity deals which require the Company to allot and issue new shares on urgent basis. iii. The Company has not issued any shares under the previous general mandate which has been obtained on 29 August 2018 and which will lapse at the conclusion of the 25th AGM to be held on 29 August 2019.

4. Item 8 of the Agenda: Proposed Adoption of New Constitution

The details of the proposal are set out in Part B of the Circular to Shareholders dated 31 July 2019, which is despatched together with this Annual Report 2019.

NOTES:

1. Appointment of Proxy.

(a) Only depositors whose names appear in the Register of Depositors as at 21 August 2019 shall be entitled to attend in person or appoint proxies to attend and/or vote on their behalf at the 25th Annual General Meeting.

(b) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy may but does not need to be a member of the Company pursuant to Section 334 of the Act.

(c) Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

(d) In the event the member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the Meeting as his/their proxy, provided always that the rest of the form of proxy, other than the particulars of the proxy, have been duly completed by the member(s).

(e) In the case of a corporate member, the instrument appointing a proxy must be either executed under its common seal or under the hand of its officer or attorney duly authorised. The corporation may by its resolution of its Board or a certificate of authorisation by the Corporation to appoint a person or persons to act as its representative or representatives to attend and vote on their behalf. 6 SHL CONSOLIDATED BHD NOTICE OF ANNUAL GENERAL MEETING (cont’d)

(f) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (Omnibus Account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds.

(g) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 6th Floor, Wisma Sin Heap Lee, 346, Jalan Tun Razak, 50400 Kuala Lumpur not less than forty-eight (48) hours before the time set for the Annual General Meeting or at any adjournment thereof at which the person named in the instrument proposes to vote, or in the case of a poll, not less than 24 hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid. An instrument appointing a proxy to vote at this Meeting shall be deemed to include the power to demand, or join in demanding a poll on behalf of the appointor.

2. Registration of members/proxies

(a) Registration will start at 9.30 a.m. on the day of the 25th AGM.

(b) Members/proxies are required to produce original identity cards (IC)/documents during registration for verification. Please remember to collect your IC thereafter.

(c) Parking tickets can be validated at the registration counter for members/proxies who park their vehicles in Corus Hotel Kuala Lumpur only. SHL will NOT validate nor reimburse members/proxies for parking charges using Touch’ N Go card, or the valet parking services at the podium.

(d) Each members/proxy will be given a wristband upon registration. No person will be allowed to enter the meeting room without wearing the wristband. There will be no replacement in the event members/ proxies lose or misplace the wristband. Members/proxies are allowed to enter the meeting room at 10.45 a.m.

(e) The registration counter will only process verification of identities and registration. For other queries/ clarification, please proceed to the Help Desk counter.

(f) The registration counters will be closed at 11.45 a.m. Unregistered members/proxies are not allowed to enter the meeting room after the registration is closed.

(g) Each member and/or proxy attending the 25th AGM in person will be entitled for one (1) lunch voucher only. Where a member and/or proxy is also appointed as proxy for other members to attend the 25th AGM, he or she will only be entitled to one (1) lunch voucher only regardless of the number of members he or she is representing.

(h) If you are attending the meeting as shareholder as well as proxy, you will be registered once and will be given only one identification wristband to enter the meeting hall.

ANNUAL REPORT 2019 7 CORPORATE INFORMATION

BOARD OF DIRECTORS

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

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

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

Senior Independent Non-Executive Director Souren Norendra

Independent Non-Executive Director Ng Chin Hoo

AUDIT COMMITTEE SHARE REGISTRAR

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

REMUNERATION COMMITTEE AUDITORS

Souren Norendra (Chairman) Khoo Wong & Chan (AF: 0736) Wong Tiek Fong Chartered Accountants Ng Chin Hoo 8.06-8.08, 8th Floor Plaza First Nationwide 161, Jalan Tun H. S. Lee 50000 Kuala Lumpur

NOMINATION COMMITTEE COMPANY SECRETARIES

Souren Norendra (Chairman) Chok Kwee Wah (MACS 00550) Wong Tiek Fong Tan Kean Wai (MAICSA 7056310) Ng Chin Hoo PRINCIPAL BANKERS REGISTERED OFFICE Malayan Banking Berhad 6th Floor, Wisma Sin Heap Lee Hong Leong Bank Berhad 346, Jalan Tun Razak CIMB Bank Berhad 50400 Kuala Lumpur Bangkok Bank Berhad Tel: 603-2163 7788 Ambank (M) Berhad Fax: 603-2163 1391 E-mail: [email protected] STOCK EXCHANGE LISTING Website: www.shlcb.com.my Main Market of Bursa Malaysia Securities Berhad Stock Name : SHL Stock Code : 6017 SUSTAINING GROWTH ANNUAL REPORT 2019 9 Corporate Structure

100% Integrated Management Corporation Sdn. Bhd.

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

60% Goodstock Land Sdn. Bhd.

100% Sin Heap Lee Construction Sdn. Bhd. CONSTRUCTION 100% * SHL Infra Sdn. Bhd.

100% Sin Heap Lee Company Sdn. Berhad

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

100% Senick Sdn. Bhd.

100% Ho Sin & Son Enterprise Sdn. Bhd.

100% Goodstock (Tawau) Sdn. Bhd.

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

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

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

* under the process of Members’ Voluntary Winding Up pursuant to Section 254(1) of the former Companies Act, 1965 10 SHL CONSOLIDATED BHD PROFILE OF DIRECTORS

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

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

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

Tengku Abdul Samad Shah attended all Board Meetings held during the financial year ended 31 March 2019.

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

Dato’ Sri Yap Teiong Choon (Executive Director) (Age 66, Malaysian, Male)

Dato’ Sri Yap was appointed to the Board on 1 March 1995. He had his early education in Victoria Institution, Kuala Lumpur. He obtained a Bachelor of Commerce with double majors in Economics and Accounting in 1976 and a Master in Commerce with Honours majoring in Advance Accounting from the University of Canterbury, New Zealand in 1977. He is a Chartered Accountant by profession and is a member of the Malaysian Institute of Accountants, the New Zealand Society of Accountants, a Fellow of the Institute of Certified Public Accountants of Singapore and the Australian Society of Certified Practicing Accountants.

He started his career with Messrs Hanafiah, Raslan and Mohamad in 1977 and subsequently left the accounting profession in 1982 and has since been managing the Sin Heap Lee Group of Companies. He is presently an Executive Director and a Director of all subsidiaries of the Company. His directorships in other public company within the SHL Group is as Director of Sungai Long Golf Resort Berhad.

Dato’ Sri Yap is a member of the Remuneration Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2019.

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

ANNUAL REPORT 2019 11 PROFILE OF DIRECTORS (cont’d)

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

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

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

Dato’ Sri Ir. Yap is a member of the Remuneration Committee of the Company. Dato’ Sri Ir. Yap attended all Board Meetings held during the financial year ended 31 March 2019.

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

Wong Tiek Fong (Non-Independent Non-Executive Director) (Age 57, Malaysian, Male)

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

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

Mr. Wong is a member of the Audit Committee, Nomination Committee and Risk Management Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2019.

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

Souren Norendra (Senior Independent Non-Executive Director) (Age 49, Malaysian, Male)

Mr. Souren Norendra was appointed to the Board on 24 February 2010. He completed his secondary education at the Methodist Boys School, Kuala Lumpur and then proceeded to England where he read law and attained his LLB (Hon) from the University of Hull in 1992. He obtained his Certificate of Legal Practice (CLP) from University Malaya and was called to the Malaysian Bar in 1995.

He has been practicing as an advocate and solicitor in the firm of Messrs Norendra & Yap since being called to the Bar and is now a Partner of the firm. His areas of specialty are in corporate and conveyancing law.

Mr. Souren is the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2019. He does not hold any directorship in any public companies and listed issuers.

Ng Chin Hoo (Independent Non-Executive Director) (Age 59, Malaysian, Male)

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

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

Mr. Ng is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2019.

ANNUAL REPORT 2019 13 PROFILE OF DIRECTORS (cont’d)

Au Lai Koong (Non-Independent Non-Executive Director) (Age 54, Malaysian, Male)

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

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

Mr. Au is a member of Risk Management Committee of the Company. He attended all Board Meetings held during the financial year ended 31 March 2019.

14 SHL CONSOLIDATED BHD PROFILE OF KEY SENIOR MANAGEMENT

Wong Yew Mei (Project Budget Controller) (Age 61, Malaysian, Female)

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

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

Ms. Wong is a member of Risk Management Committee of the Company.

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

Leong Chin Cheong (Senior Project Manager) (Age 59, Malaysian, Male)

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

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

Mr. Leong is the Chairman of Risk Management Committee of the Company.

He does not hold any directorship in any public companies and listed issuers. He does not have any family relationship with any Director and/or major shareholder, nor any conflict of interest with the Company. He has no convictions for any offences within the past 5 years (other than traffic offences, if any) nor any public sanction or penalty imposed by regulatory bodies during the financial year. ANNUAL REPORT 2019 15 GROUP FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 2015 2016 2017 2018 2019

FINANCIAL RESULTS (RM Million) Revenue 230.6 231.9 203.2 180.5 171.2 Profit before Tax 123.2 96.2 102.7 82.4 81.7 Net Profit 104.2 80.0 82.8 69.7 69.4 Net Profit attributable to Shareholders 103.5 79.7 82.3 69.1 62.4

FINANCIAL POSITION (RM Million) Total Assets 904.7 871.6 897.1 941.3 993.5 Share Capital 242.1 242.1 242.1 247.7 247.7 Equity attributable to Shareholders 694.4 713.8 750.2 790.5 804.5

FINANCIAL RATIOS Basic Earnings per Share (sen) 42.73 32.90 33.99 28.55 25.78 Net Tangible Assets per Share (RM) 2.87 2.95 3.10 3.26 3.32 Return on Equity (%) 14.90 11.17 10.97 8.74 7.76 Return on Capital Employed (%) 24.71 22.58 21.47 17.10 14.19 Return on Invested Capital (%) 20.90 18.77 17.31 14.48 12.05 Gross Dividend per Share (sen) 25.00 20.00 18.00 16.00 16.00 Net Dividend per Share (sen) 25.00 20.00 18.00 16.00 16.00

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

123.2 230.6 231.9

102.7 96.2 203.2 82.4 180.5 81.7 171.2

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Equity attributable to Shareholders Basic Earnings per Share (RM Million) (Sen) 804.5 790.5 750.2 42.73 713.8 33.99 694.4 32.90 28.55

25.78

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 New Challenges, Towards The Future ANNUAL REPORT 2019 17 MANAGEMENT DISCUSSION AND ANALYSIS Financial Year Ended 31 March 2019

Overview of Business Results and Operation

The Malaysian economy expanded at a more moderate pace of 4.7% in 2018 (2017: 5.9%). Despite a positive start to 2018, the economy subsequently was confronted with several external and domestic challenges. Major policy and political shifts, arising partly from the global trade tensions and the historic change of government in Malaysia, became sources of uncertainty for the economy. Unanticipated supply disruptions in the mining and agriculture sectors, as well as commodity exports adversely affected Malaysia’s economic performance, resulting in a larger-than-expected moderation in growth.

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

For the financial year under review, revenue is reported at RM171.24 million, compared to RM180.54 million recorded in the previous financial year. The decrease in revenue was mainly attributable to substantial handover of sold property units to our purchasers at Goodview Heights, Sungai Long South, Selangor Darul Ehsan in the previous financial year. The encouraging demand for homes at Sg Long Residence condominiums in Bandar Sungai Long, Selangor Darul Ehsan and the integrated mixed-development township namely Goodview Heights, located at Sungai Long South, Selangor Darul Ehsan have contributed significantly to the financial performance of the Company.

Profit before tax decreased marginally by 0.8% from RM82.36 million reported in the previous year to RM81.71 million for the current year, mainly due to lower revenue generated by the property development segment. The earnings per share for the financial year under review is 25.78 sen.

18 SHL CONSOLIDATED BHD MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2019

GROUP FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 2015 2016 2017 2018 2019

FINANCIAL POSITION (RM Million) Total Assets 904.7 871.6 897.1 941.3 993.5 Share Capital 242.1 242.1 242.1 247.7 247.7 Equity attributable to Shareholders 694.4 713.8 750.2 790.5 804.5

Contract assets, trade and other receivables increased from RM35.96 million at the end of the previous financial year to RM123.28 million at the end of the current financial year. This was mainly due to contract assets arising from sale of Sg Long Residence condominiums in Bandar Sungai Long, Selangor Darul Ehsan. Contract liabilities, trade and other payables increased from RM52.84 million at the end of the previous financial year to RM64.86 million at the end of the current financial year, mainly due to contract liabilities arising from Goodview Heights, Sungai Long South, Selangor Darul Ehsan.

Cash, deposits and short-term investments have decreased from RM370.77 million to RM308.70 million mainly due to substantial increase in net cash outflow primarily arising from the execution of the built-then- sell concept under the property development segment and dividends paid to shareholders. Nevertheless, a high level of liquidity is being maintained, mainly in the form of cash and deposits.

On a consolidated basis, the current ratio is about 1,064.8% as at 31 March 2019, down from 1,134.7% as at end of the previous financial year, mainly attributable to an increase in contract liabilities.

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

The property development segment continues to be the key contributor registering a revenue of RM158.91 million for the financial year ended 31 March 2019, representing about 92.8% of the consolidated revenue. The property development segment will remain focused on building landed properties and affordable value homes with readily available mortgage financing facilities from banks. The following major property development projects located in Selangor Darul Ehsan are being developed in phases.

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

Sg Long Residence comprise of 572 units of condominium and commercial units with a gross development value of approximately RM318.00 million. The successful launch of Sg Long Residence condominiums Phase 1 in February 2018 has contributed significantly to the financial performance of the Group. Phase 2 of Sg Long Residence condominiums has been launched in February 2019. The entire Sg Long Residence has been completed end of May 2019. ANNUAL REPORT 2019 19 MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2019

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

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

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

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

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

The development of the final phase of about 50 units of commercial shop office is in progress.

(d) Bandar Sungai Long, Selangor Darul Ehsan

Bandar Sungai Long is a thriving RM2 billion township that hosts Universiti Tunku Abdul Rahman, Putra Specialist Hospital Kajang and Sungai Long Golf & Country Club which offers its members a world class golf course designed by golf master Jack Nicklaus, the first Jack Nicklaus signature golf course in Malaysia.

Two landed property development projects will be launched in the near future in Bandar Sungai Long, namely Villa Sg Long comprising of 8 units of semi-detached houses and 21 units of bungalows and Kiara Sg Long comprising of 39 units of bungalows.

(e) Rasa in Batang Kali, Selangor Darul Ehsan

The project in Rasa, Batang Kali will be a mixed development of about 90 acres comprising of about 250 units of affordable residential terrace homes and 103 units of industrial factory to meet the demand of a range of industries.

Risk Management

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

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

SHL Consolidated Bhd has long established a very strong cash balance and high level of liquidity to ease its exposure to the volatility of the Malaysian social and economic environment. The Company’s financial model is capable of managing the investment and operating cost of its property development projects and achieving sustainable economic growth and a reasonable return on its capital employed and invested capital. 20 SHL CONSOLIDATED BHD MANAGEMENT DISCUSSION AND ANALYSIS (cont’d) Financial Year Ended 31 March 2019

Outlook

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

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

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

Dividend

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

The Company has paid an interim dividend of 8 sen per share, amounting to a net dividend payable of approximately RM19.37 million in April 2019 for the financial year ended 31 March 2019.

Subject to the approval by our company’s shareholders at the forthcoming Annual General Meeting, our Board of Directors is pleased to recommend a final dividend of 8 sen per share in respect of the financial year ended 31 March 2019. ANNUAL REPORT 2019 21 Corporate Governance Overview Statement

The Board of Directors of SHL Consolidated Bhd (SHL) presents this statement to provide shareholders and investors with an overview of the corporate governance (CG) practices of the Company under the leadership of the Board during the financial year 2019. This overview takes guidance from the key CG principles as set out in the Malaysian Code on Corporate Governance (MCCG).

This statement is prepared in compliance with Bursa Malaysia Securities Berhad Main Market Listing Requirement and it is to be read together with SHL Group’s application of each principle set out in the MCCG Corporate Governance Report 2019 (CG Report) for the financial year ended 31 March 2019 which is available on SHL’s corporate website at www.shlcb.com.my.

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

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

Board Responsibilities

The Board is responsible for formulating and reviewing the Company’s strategic plans and key policies, charting the course of the Company’s business operations. The Board, through the Audit Committee and Risk Management Committee provides effective oversight of the Management’s performance, risk assessment and controls over business operations, and compliance with regulatory requirements.

The Chairmen of the respective Committees report to the Board on the outcome of their Committee meetings and such reports are included in the Board papers. The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives.

Roles of Chairman and Executive Directors

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

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

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

Company Secretaries

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

Board Meetings and Access to Information

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

The Chairman of the Audit Committee, Nomination Committee and Remuneration Committee brief the Board on matters discussed as well as decisions taken in their respective Committee Meetings. A Risk Management Report will be tabled in the Audit Committee meeting for review and subsequently the said Report is presented to the Board by the Chairman of the Audit Committee at least once a year. 22 SHL CONSOLIDATED BHD Corporate Governance Overview Statement (cont’d)

Board Charter

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

Whistleblower Policy and Procedures

The purpose of the Whistleblower Policy and Procedures is to provide avenue for directors and staff to expose any violation or improper conduct or wrongdoing within the Company.

Code of Conduct & Ethics

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

The Board reviewed the Board Charter, Whistleblower Policy and Procedures and Code of Conduct and Ethics periodically.

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

Board Composition

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

Board Balance and Independence

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

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

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

Based on the assessment carried out during the financial year ended 31 March 2019, the Board is satisfied with the level of independence demonstrated by all the Independent Directors and their ability to act in the best interest of the Company.

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

Currently, the Board does not have any female director and may consider recruiting a female director in the future. ANNUAL REPORT 2019 23 Corporate Governance Overview Statement (cont’d)

Tenure of Independent Directors

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

As at the date of this Statement, Mr Souren Norendra (Senior Independent Non-Executive Director) has served more than 9 years on the Board.

The Board meets at least five (5) times a year, with additional meetings convened when necessary to review matters that require the Board’s urgent attention and decision. Meetings are scheduled at the beginning of each calendar year to enable the Board members to plan their schedules accordingly. During the financial year ended 31 March 2019, the Board met on five (5) occasions, where a formal agenda are forwarded to all Directors at least two (2) weeks before the meetings.

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

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

The attendance of each Director at the Board Meeting held during the financial year ended 31 March 2019 was as follows:

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

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

All the Directors complied with the minimum 50% attendance requirement in respect of Board meetings held during the financial year ended 31 March 2019 pursuant to Paragraph 15.05 of the Bursa Malaysia Listing Requirements. 24 SHL CONSOLIDATED BHD Corporate Governance Overview Statement (cont’d)

Directors’ Training

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

Training programmes attended by the Directors during the financial year ended 31 March 2019 are as follows:

Name of Directors Course Title Date

Dato’ Sri Yap Teiong Choon Post Implementation Challenges, New Corporate 20.4.2018 Rescue Mechanism Rules 2018 & Malaysian Code of Corporate Governance

MFRS15 – Mastering Revenue Recognition from Contract 19.9.2018 with Customers

Detailed Analysis and Application of the Three New 12.12.18- Standards: MFRS9, MFRS15 & MFRS16 13.12.18

Latest on Employers’ Tax Obligations in 2019 7.3.2019

Ng Chin Hoo Audit Committee Institute (ACI) Breakfast Roundtable 2018 3.8.2018

Wong Tiek Fong MIA International Accountant Conference 2018 9.10.18- 10.10.18

Sustainability Engagement Series for Directors/ 6.9.2018 Chief Executive Officers 2018 (Main Market)

New Appointment and Re-Election of Directors

The Nomination Committee comprises of two (2) Independent Non-Executive Directors and one (1) Non- Independent Non-Executive Director.

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

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

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

The duties and responsibilities of the Nomination Committee are as follows:

i. identifying, reviewing and recommending candidates for appointment as Directors of the Company; ii. re-nominating retiring Directors for re-appointment at annual general meeting (AGM) and determining annually the independence of Directors; iii. deciding the assessment process and implementing a set of objective performance criteria to be applied from year to year for evaluation of the Board’s performance; iv. evaluating the Board’s effectiveness as a whole and each Director’s contribution to its effectiveness in accordance with the assessment process and performance criteria; and v. ensuring an appropriate framework and succession plans for members of the Board. ANNUAL REPORT 2019 25 Corporate Governance Overview Statement (cont’d)

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

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

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

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

Upon the recommendation of Nomination Committee, the following Directors retire by rotation at the forthcoming 25th AGM of the Company pursuant to Article 88 of the Company’s Articles of Association and being eligible, have offered themselves for re-election:

(a) Dato’ Sri Yap Teiong Choon (b) Wong Tiek Fong (c) Au Lai Koong

Annual Assessment

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

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

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

The questionnaires and the assessment parameters were recommended by the Nomination Committee and approved by the Board. The completed questionnaires are then reviewed by the Nomination Committee before the Nomination Committee completes its evaluation of the individual Directors. When deliberating on the performance of a particular Director who is also a member of the Nomination Committee, that member abstains from the discussions in order to avoid any conflict of interests. The results of the individual evaluation of the Directors are also used by the Nomination Committee to review, where appropriate, the composition of the Board and Committees, and to support its proposals, if any, for appointment of new members and its recommendations for the re-appointment and re-election of retiring Directors. Comments from the Directors, if any, concerning the Board as a whole and the general performance of the Directors, are also presented to the Board. 26 SHL CONSOLIDATED BHD Corporate Governance Overview Statement (cont’d)

Time Commitment

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

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

Remuneration

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

Chairman:

Souren Norendra (Senior Independent Non-Executive Director)

Members:

Ng Chin Hoo (Independent Non-Executive Director); Dato’ Sri Yap Teiong Choon (Executive Director) - Resigned on 16.7.2019; Dato’ Sri Ir. Yap Chong Lee (Executive Director) - Resigned on 16.7.2019; Wong Tiek Fong (Non-Independent Non-Executive Director) - Appointed on 16.7.2019

The Duties and responsibilities of the Remuneration Committee are as follows:

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

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

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

The remuneration of the Board is disclosed in the SHL’s Corporate Governance Report 2019 for the financial year ended 31 March 2019 which is available on SHL’s corporate website at www.shlcb.com.my.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

Audit Committee

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

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

Members: Mr. Ng Chin Hoo (Independent Non-Executive Director); and Mr. Wong Tiek Fong (Non-Independent Non-Executive Director) ANNUAL REPORT 2019 27 Corporate Governance Overview Statement (cont’d)

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

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

Assessment of suitability and independence of external auditors

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

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

Risk Management and Internal Control Framework

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

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

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

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

Internal Audit Function

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

The Board recognises the importance of an effective internal control system in improving risk management, enhancing controls and ensuring compliance with applicable laws and regulations. The internal control system also designed to safeguard the Group’s operations and assets and hence protect shareholders’ investment in the Group. In this regard, the internal audit function of the Group is carried out by the internal audit department. The internal audit function is placed under the preview of the Audit Committee. The Head of Internal Audit present the risk assessment report on the adequacy, efficiency and effectiveness of the Group’s internal control system to the Audit Committee. 28 SHL CONSOLIDATED BHD Corporate Governance Overview Statement (cont’d)

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

Effective Stakeholder Communication

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

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

Periodic and Continuous Disclosure

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

Annual General Meeting

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

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

Electronic Communications

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

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

This CG Overview Statement was approved by the Board of Directors on 29 May 2018. ANNUAL REPORT 2019 29 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

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

Board’s Responsibility

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

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

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

KEY FEATURES OF RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES

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

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

KEY ELEMENTS OF THE RISK MANAGEMENT AND INTERNAL CONTROLS

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

• Clearly defined authorization, approval limits and control procedures within the Board and the Senior Management. • Top down communication is conducted to all levels pertaining to Group’s value and code of ethics. • Standard Operating Policies and Procedures are systematically documented, revised and made available to guide staff in their day-to-day work. • Senior Management meet on a periodic basis with managers of business units to ensure that the processes for identifying, evaluating, monitoring and reporting of risks and internal control are implemented adequately and effectively. • Periodic reporting to the Board and its committees on the results of control assurance, risk management and audit activities of the Group. • The Board reviewed the effectiveness of risk management and internal controls annually and ensured that they are effective and efficient. 30 SHL CONSOLIDATED BHD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

RISK MANAGEMENT FRAMEWORK

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

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

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

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

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

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

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

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

6. Ongoing risk management education and training is provided at management and staff levels. ANNUAL REPORT 2019 31 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

RISK ASSESSMENT REVIEWS

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

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

1. Operational

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

i. Project Management Risks

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

ii. Human Resources Risks

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

iii. Crisis Risks

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

2. Competition

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

In order to stay competitive, the Group shall constantly update itself on the latest market conditions, sustaining Group’s track record and continue to maintain its competitive edge in terms of cost efficiency, service quality, reliability and innovativeness. Applying energy saving and other technologically advanced green features will enhance the Group’s niche position in the construction and property development industries. 32 SHL CONSOLIDATED BHD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

3. Supply and Cost of Raw Materials

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

4. Cost Overruns

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

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

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

5. Government Regulations and Controls

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

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

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

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

6. Housing loans financing

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

• Switching product focus to affordable housing where demand is still resilient. • Maintaining close working relationship with financial institutions to counter the cooling policies. • Developing innovative strategies and negotiating attractive interest rate for loans. ANNUAL REPORT 2019 33 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont’d)

Review of this Statement

Pursuant to paragraph 15.23 of the Main Market Listing Requirements, the External Auditors have reviewed this Statement for inclusion in the 2019 Annual Report, and reported to the Board that nothing has come to their attention that causes them to believe that the Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control. The statement was approved by the Board on 29 May 2019.

Conclusion

The Board is of the view that the system of internal control and risk management are in place for the year under review, and up to the date of approval of this Statement, is sound and sufficient to safeguard shareholders’ investment, the interests of customers, regulators, employees and other stakeholders, and the Group’s assets. The Board has received assurance from the Executive Directors and the CFO that the Group’s risk management and internal control system are operating adequately and effectively, in all material aspects, based on the risk management model adopted by the Group. 34 SHL CONSOLIDATED BHD AUDIT COMMITTEE REPORT

MEMBERSHIPS AND MEETINGS

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

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

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

The Audit Committee met five (5) times during the financial year ended 31st March 2019. The attendances of the Audit Committee Members were as follows:

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

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

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

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The main activities undertaken by the Committee were as follows:

i. Reviewed the External Auditors’ scope of work and audit plans for the year. Prior to the audit, representatives from the external auditors presented their audit strategy and plan.

ii. Reviewed the independence and objectivity of the External Auditors and the services provided, including non-audit services. The Audit Committee undertook an annual assessment of the External Auditors including the quality of audit, sufficiency of resources and the External Auditors’ independence, objectivity and professionalism. The Audit Committee also considered the nature of the provision of the non-audit services and fees and is of the opinion that such non-audit services and fees did not impair or threaten the audit independence. Based on the assessment, the Audit Committee is of the opinion that External Auditors is independent for the purpose of the Group’s statutory audit.

iii. Recommended to the Board for approval of the audit and non-audit fees payable to the External Auditors as disclosed in Note xx to the financial statements.

iv. Reviewed the Internal Audit Department’s resources requirements, programmes and plans for the financial year under review.

v. Reviewed the internal audit reports, which highlighted the audit issues, recommendations and management’s response. Discussed with management actions taken to improve the system of internal control and ensure that it is efficient and adequate.

vi. Recommended to the Board improvement opportunities in internal control, procedures and risk management. ANNUAL REPORT 2019 35 AUDIT COMMITTEE REPORT (cont’d)

vii. Assessed and reviewed the going concern basis for preparing the Group’s consolidated financial statements based on principal risks, uncertainties, capital expenditures, future performance and existing financial position of the Group. viii. Met with the External Auditors and Internal Auditors without the presence of any executive Board member. At the meeting the AC enquired about significant and unusual events, abnormal transactions and conflict of interest on related party transactions. ix. Reviewed the changes in or implementation of major accounting policy, significant financial reporting issues, judgements made by Management, unusual events in the quarterly and annual report prior to submission to the Board for their consideration and approval. The Audit Committee was satisfied that there were no significant changes of major accounting policy, financial reporting issues, judgements made by Management and unusual events during the year under reviewed. x. Reviewed the Company’s compliance in particular the quarterly and annual financial statements with the Listing Requirements of Bursa Malaysia Securities Berhad, MASB and other relevant legal and regulatory requirements. xi. Reviewed with the External Auditors the results of the audit and the audit report for year ended 31.3.2019. At the meeting, the AC discussed and reviewed key audit matters with the External Auditors and is satisfied with the steps taken by External Auditors to resolve the key audit matters. xii. Reviewed on a quarterly basis the related party transactions entered into by the Group and ensure that the transactions are fair and reasonable, and are not to the detriment of the minority shareholders. xiii. Reviewed the Group risk assessment report and ensured that action plans taken are adequate and effective.

INTERNAL AUDIT FUNCTION

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

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

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

During the financial year, the cost involved in performing in-house internal audit function is approximately RM233,446/-. 36 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT

SHLCB SUSTAINABILITY STATEMENT

Our strong commitment to sustainability governs the effective management of all areas of business operations. It governs our interaction with all stakeholder relationships including our employees, customers, local communities, shareholders and members of the public. Our systems and procedures provide a robust framework for excellence, helping us meet industry best practice and standards.

The Group continues to be committed to the transparent disclosure of its sustainability reporting. This statement presents management sustainability risks and opportunities in Economic, Environmental and Social (EES) areas. Reading this statement with other sections of this annual report will provide a comprehensive account of the Group’s financial and non-financial performance.

REPORT PARAMETERS

Reporting Period: Fiscal year from 1 April 2018 to 31 March 2019.

Reporting Cycle: Annual

Process for Defining Report Content: SHL Consolidated Bhd (SHLCB) has applied the Global Reporting Initiative Standards and Bursa Malaysia Sustainability Reporting Framework in the preparation of this statement. Topics that reflect EES impacts that are relevant to stakeholders have been selected and regulations affecting business operations have also been reviewed. Internal policies and values guide our reporting, particularly those deemed most relevant to stakeholders. These factors and their effect on our ability to continue to operate successfully are also considered.

Boundary of the Statement:

This statement covers:

• SHLCB and its subsidiaries unless otherwise stated • Information pertaining to the operations of our leased properties and facilities that are under our direct control and/or influence.

DATA MEASUREMENT TECHNIQUES AND THE BASIS OF OUR CALCULATIONS

Performance data and case studies that are representative of our general approach are provided if group-wide information is unavailable. Current and historical performance data and statistics are also monitored in order to evaluate progress made towards achieving targets.

Environmental data such as energy and water usage is derived from utility bills. Meter readings are used wherever possible.

BOARD RESPONSIBILITY AND APPROVAL OF THE STATEMENT

The Board of Directors acknowledges its responsibility to ensure the integrity of this sustainability statement in line with Bursa Malaysia requirements. Accordingly, the Board has overseen its preparation and presentation and considers it a balanced and fair representation of the Group’s performance.

TRANSPARENCY AND ACCURACY OF INFORMATION

The Group is committed to achieving the highest standards of transparency, accountability and integrity in its reporting and communications. Providing stakeholders and the financial investment community with clear, meaningful and timely information on the Group’s operations and results is crucial for our long-term relationships. ANNUAL REPORT 2019 37 SUSTAINABILITY STATEMENT (cont’d)

SHLCB SUSTAINABILITY STATEMENT (cont’d)

MATERIALITY

We conducted a materiality assessment to identify the most important aspects of sustainability across our value chain. This approach ensures that the most salient areas are highlighted. We will review our assessment every year as required by Bursa Malaysia to ensure it reflects changes in our business operations and the external business environment.

STAKEHOLDER FEEDBACK

We welcome and appreciate any constructive input and feedback from stakeholders on the contents of this report.

Enquiry SHL Consolidated Bhd, 16th Floor, Wisma Sin Heap Lee, 346 Jalan Tun Razak, 50400 Kuala Lumpur.

03-2163 7788

SUSTAINABILITY AT SHLCB

Sustainability is a cornerstone of our operations. Established as an industry pioneer, we will continue to meet excellent economic, environmental and social standards in sustainability. Customers, business partners and suppliers have confidence in our strengths and capabilities. The long-term relationships forged with these parties cement our continued success. Our ultimate goal is building a fully sustainable business.

SUSTAINABILITY GOVERNANCE

The Board has the overall responsibility for sustainability and considers environmental, social and governance (ESG) matters in the formulation of the business strategy. ESG elements that are material to value creation are integrated into our balanced scorecard. This scorecard is used to set objectives, drive behaviours, measure performance and determine targets for our people.

Led by the Group Executive Directors, SHLCB’s sustainability champions are responsible for:

• Developing the overarching sustainability framework, • Setting key performance indicators (KPIs) and targets in consultation with the relevant stakeholders, • Driving sustainability initiatives across the Group, and • Advising on material ESG matters that contribute to SHLCB’s overall materiality assessment, which in turn helps the Board’s strategic planning.

SHLCB’s sustainability champions meet regularly and update the Group Executive Directors and senior management team. 38 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

SUSTAINABILITY AT SHLCB

OUR VALUE CREATION MODEL

We strive to create lasting value for all our key stakeholders. Our business model integrates our vision, strategies and values, transforming various capital into value over time. SHLCB delivers sustainable value to all its stakeholders by balancing its internal priorities and external impact.

SHLCB’s Value Creation Model

Internal capital such as our corporate strategy and business growth plan

External capital which includes key stakeholders such as customers, shareholders, employees, business partners, society and the environment

ENGAGING AND INVOLVING STAKEHOLDERS

Stakeholder engagement is crucial from a sustainability perspective and supports our understanding of emerging risks and opportunities. Various stakeholder communication channels employed throughout the course of any given year include site visits, consultations, knowledge-sharing forums, collaboration projects, meetings and events. Engaging with stakeholders allows us to help them while creating shared value.

Our Stakeholder Groups

Customers including Suppliers, contractors Employees tenants and buyers and subcontractors

Non-governmental Communities organisations (NGOs) Industry associations NGO

Regulators and government Financial institutions Certification bodies agencies

General public ANNUAL REPORT 2019 39 SUSTAINABILITY STATEMENT (cont’d)

ASSESSING MATERIALITY

SHLCB’s approach to materiality is guided by Bursa Malaysia’s Sustainability Reporting Guide and the Global Report Initiative Standards. Generally, issues are prioritised if:

• Internal and external stakeholders consider them material • They are essential in the pursuit of our sustainability strategy

Materiality Analysis Process

Evaluating Creating Identifying Mapping important a matrix of potential Identify key identified material material internal and internal and material aspects aspects for external external matters through internal and material stakeholders according to desk-based external aspects their priority research stakeholders

The results of our materiality assessment are presented in the materiality matrix below.

Materiality Matrix

Economic performance High Compliance with laws and regulations

Sustainable development Safe and quality deliverable

Career progression Local community development

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

Biodiversity

Corporate philanthropy Low Low Relevance to SHLCB High

40 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

ECONOMIC VALUE CREATION

Announced in November 2018, Malaysia’s Budget 2019 helped lower to middle-income groups. Once again, provision was made for affordable housing, which is expected to fuel demand for this price segment.

According to the Malaysian Institute of Estate Agents (MIEA), the local property market is expected to improve until at least 2020. Malaysia is still considered a safe market in which to invest, buy and sell properties: there is no significant difference between real market demand and market supply. However, market challenges will exist until affordability is addressed, particularly in income levels and property prices.

The Government continues to play its role in tackling affordability that would affect Malaysia’s economic performance and the well-being of its people. SHLCB continues to focus on building landed properties and affordable value homes with readily available mortgage financing facilities in the hope of achieving a healthier market.

OUR CONTRIBUTION TO THE INDUSTRY

SHLCB is committed to long-term value creation with a focus on integrated commercial and residential property development. Since entering property development in the 1960s, the Group has successfully developed more than 18,000 houses for various housing schemes. The Group’s careful diversification strategy ensures it is represented in several major sectors of the economy including property development, construction, manufacturing, quarrying, trading, property investment and hospitality services.

OUR ROLE IN ADVANCING THE INDUSTRY

SHLCB is an investment holding company that provides strategic, financial and corporate planning services. SHLCB and its subsidiaries are an integrated commercial and residential property development group that operates in many other related industries.

SHLCB's Industries

Granite quarrying and manufacturing General building Earthworks of aggregates construction

Ownership and Manufacture of clay Infrastructure works operation of a golf resort bricks

Supply of finished Marketing and brickworks of wall and distribution of building Rental of properties other brick structures materials ANNUAL REPORT 2019 41 SUSTAINABILITY STATEMENT (cont’d)

ECONOMIC VALUE CREATION (cont’d)

OUR CONTRIBUTION TO THE INDUSTRY (cont’d)

Manufacturing and Supply of Bricks, Brickworks and other Brick Structures

With over 30 years of experience in manufacturing bricks, Sin Heap Lee Brickworks Sdn Bhd operates a fully-automated plant in Sepang, Selangor. The maximum output of the Italian plant is 4 million bricks a month or 120,000 tonnes per year.

Characteristics of Our Bricks

Dried and fired Made from 100% Produced by into various types Fire resistant as purified clay extrusion for different fired at 1,000°C applications

Technology Best insulation High compressive adopted from an Ideal for load against heat and strength of up to Italian clay plant bearing walls and cold for homes 5000 psi manufacturer heavy structures

Low soluble salts Approximately content for 15 to 18% water increased absorption performance

AFFORDABLE HOUSING FOR THE CITIZENS AND THE ECONOMY

SHLCB’s commitment to providing affordable housing has been sustainable for over 50 years. Rumah Selangorku is a people-centric initiative by Lembaga Perumahan dan Hartanah Selangor (LPHS) to offer affordable homes.

SHLCB continues to support LPHS’s objective of building quality homes within reach of citizens to realise the “One Family, One Perfect Home: across established developments in Selangor”. We have recently completed Pangsapuri Sri Budiman under this scheme. The 12-block development in Shah Alam consists of 536 affordable homes, a mosque and community hall.

TRANSPARENT AND SUSTAINABLE SUPPLY CHAIN

SHLCB acknowledges that each purchasing decision can affect the environment and society. These impacts are carefully considered throughout the supply chain.

A transparent procurement process is practised that is fair for both parties. Although we have no formal policy on procuring through local suppliers, it is our common practice to source locally whenever possible without compromising quality. Almost 100% of the Group’s suppliers are local.

INCORPORATING SAFETY, HEALTH AND ENVIRONMENTAL FACTORS IN OUR SUPPLY CHAIN

Supplier selection criteria include price, product/service quality, deliverables as well as terms and conditions. Aspects of safety, health and environment (SHE) have also been incorporated into supply chain processes.

Contractors must declare their SHE standards and compliance records. These documents outline training, monitoring, reporting procedures, compliance with statutory regulations, standards and Codes of Practice to be implemented throughout the contract period. SHE factors are also included in our contractual agreements with supply chain partners.

Periodically, we conduct performance evaluations of our site contractors and suppliers. Any concerns are communicated immediately so that problems can be rectified. 42 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

ENVIRONMENTAL VALUE CREATION

SHLCB is committed to minimising its environmental impact. Lowering the environmental footprint of developments through innovation creates values for its stakeholders.

Incorporating Environmental Sustainability into Our Life-Cycle Management

Feasibility

After-sales Design service

Environmental Sustainability

Operation Procurement

Construction

We continue to incorporate environmental sustainability into our life cycle management. Monitoring environmental impact is integral to our business operations. Minimising the use of environmental resources such as energy and water contributes to the operational efficiency and long-term sustainability of the Group.

ENERGY MANAGEMENT

Our industry is energy intensive with significant amounts of electricity and fuel being consumed. As this directly affects sustainable development, we take all possible steps to minimise our energy consumption. Energy use is minimised by employing efficient construction methodologies and equipment along with cutting-edge technologies.

We record, monitor and reduce our energy consumption. Energy conservation is relayed to our employees to improve their awareness of its importance. For example, all air-conditioning units are switched off during lunch breaks and after-office hours. Our energy consumption is presented in the chart below.

Electricity Consumption (kWh)

2,067,531 1,710,211 1,729,604

FY2017 FY2018 FY2019 ANNUAL REPORT 2019 43 SUSTAINABILITY STATEMENT (cont’d)

ENVIRONMENTAL VALUE CREATION (cont’d)

ENERGY MANAGEMENT (cont’d)

Climate Change and Greenhouse Gas Emissions

According to United Nations estimates, real estate accounts for approximately 40% of the world’s energy consumption and approximately 33% of all carbon emissions. Reducing emissions has a significant impact on environmental sustainability. We address climate change head-on by creating sustainable workspaces, buildings and communities where everyone can thrive.

A large proportion of our emissions result from consuming electricity at our offices and sites. We are moving towards green construction and green operations as a strategy to reduce energy consumption and the overall impact on the built and natural environments.

SHLCB has started to measure and record its greenhouse gas emissions. Monitoring these emissions is the first step towards achieving our goal of reducing greenhouse gases.

Our emissions accounting is based on the internationally recognised GHG Protocol established by the World Business Council for Sustainable Development (WBCSD) and World Research Institute (WRI). Emissions accounting is based on the GHG Protocol classification of direct and indirect emissions.

Scope Category Indicators Measured Scope 1 Direct GHG emissions • Company-Owned Vehicles • Generators and Machinery Scope 2 Indirect GHG emissions • Electricity

SCOPE 1

SHLCB reports on GHG emissions from its company-owned vehicles and diesel used by our generators and machinery. Consumption is calculated from fuel purchases and fuel volume is derived from the cost of purchase. The volume of CO2 emissions from the consumption of fuel is derived from the emission factor published by the IPCC Guidelines for National GHG Inventories.

Scope 1 Emissions (CO2e MT)

Source FY2017 FY2018 FY2019 Generators and Machinery N/A 128,109 106,481 Company-Owned Vehicles N/A N/A 16,643

SCOPE 2 Electricity has been calculated from Group-wide electricity bills. Electricity used by our buildings and sites owned and operated by the Group has been used in this calculation.

CO2 emissions from the use of electricity were derived using the emission factor published by the Malaysian Green Technology Corporation for the Peninsular Grid.

Scope 2 Emissions (CO2e MT)

Source FY2017 FY2018 FY2019 Electricity (MT) 1,187 1,200 1,435 44 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

ENVIRONMENTAL VALUE CREATION (cont’d)

WASTE MANAGEMENT

Our various business activities generate different categories of waste. We have introduced waste management plans to minimise the generation of waste and identify appropriate means of disposal. Since disposal methods vary depending on the type of material, wastes collected and generated on-site are separated accordingly.

We have made adequate provisions for the collection, removal and regulated disposal of refuse and solid wastes. SHLCB recycles its waste whenever possible. Minimising the volume of waste generated reduces the burden on the local landfill. Old tiles and broken bricks are recycled for hardcore flooring.

Unrecyclable solid waste is properly stored in bins before being sent to a designated landfill site. Regular collections of these wastes are essential to ensure cleanliness and to avert any outbreaks of diseases.

Scheduled wastes are managed in accordance with the Environmental Quality (Scheduled Wastes) Regulations, 2005. Our strict waste management processes follow the sustainability guidelines for the treatment of waste.

Scheduled wastes are properly stored and secured at a designated location, on site. These wastes are collected by a third-party licensed scheduled waste collector and sent to a designated landfill site.

WATER MANAGEMENT

Water usage is minimised by controlling usage, recycling and disposal. We take stringent measures to minimise water wastage and monitor consumption for each project. We also reuse and recycle water at construction sites whenever practicable and inculcate the importance of reducing water usage in our people. Our water consumption is presented in the chart below.

Water Consumption (m3)

2,799 2,630

1,153

FY2017 FY2018 FY2019 Rainwater harvesting captures and stores rainwater that falls on site. This is a valuable way of reducing a building’s municipal potable water consumption without regulating occupants’ usage. Rainwater harvesting systems have been installed on the roofs of several of our developments including condominiums, bungalows and semi-detached houses.

COMPLIANCE

There were no major cases of environmental noncompliance during this period. SHLCB remains within the safe limits set by the Department of Environment (DOE) in terms of air quality, water quality, noise levels and dust pollution. ANNUAL REPORT 2019 45 SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION

FOR SOCIETY

SHLCB continues to help build and sustain healthy, thriving communities by partnering with the local communities we serve. We work together in order to maximise our efforts in enhancing wellbeing by delivering education, job training, financial stability as well as safe and affordable housing.

Focusing on affordable housing has allowed us to positively affect the lives of hundreds of thousands of people. We empower individuals, families and communities by extending financial and non-financial assistance to those in need. The management supports philanthropic donations that are aligned with the Group’s vision, mission and values.

RESPECTING HUMAN RIGHTS

SHLCB is committed to advancing human rights through company policies and business activities, and ensure that the people we engage with are treated fairly and with respect.

We respect and protect basic human rights guaranteed by international declarations, national constitutions and judicial precedents. We do not infringe on such rights. These practices ensure consistent and fair employment practices across the Group.

Our Commitment to Human Rights

We do not discriminate on the We respect one another as grounds of ethnicity or race, religious individuals or political convictions or other beliefs, gender, regional or family background, disability or age.

SHLCB and both its contractors Every worker’s basic labour rights and subcontractors do not take are respected including freedom of part in any form of forced or association. child labour.

We ensure safe and healthy working We comply with workplace conditions, promote the creation of health and safety laws as well as comfortable work environments and regulations designed to prevent do not act in ways that conflict with workplace accidents. these aims. 46 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION

FOR OUR PEOPLE

Our people are the core of our business success. Their dedication allows us to continue building our future and be highly competitive in our industry.

Our goal is to be a company of choice where staff are proud to work. Employees are nurtured and empowered by working in a safe and healthy environment and presented with interesting, challenging and continuous development opportunities.

BENEFITS AND COMPENSATION

We provide attractive rewards packages that recognise performance and motivate our people to exceed their performance targets. Employees are provided with comprehensive benefits as summarised below.

Incentives and Benefits Given to SHLCB Staff

Leave Financial & Allowances Other Insurance

• Annual leave • Bonus • Allowance for • Uniforms for • Sick leave • Pay rises directors/senior security guards • Maternity and • Social Security management and hospitality paternity leave (SOCSO) • Overtime meal team • Marriage leave • Employee allowance • Compassionate Insurance • Reimbursement leave Scheme of medical fees • Group Personal • Reimbursement Accidents (PA) of tolls

Periodically, we conduct a salary survey and benchmarking exercise against our industry peers to maintain our competitiveness. The Group uses the salary guide issued by the Malaysian Employers Federation (MEF) as a reference.

FOSTERING AN OPEN AND ENGAGED WORKFORCE

SHLCB places great emphasis on employee involvement and empowerment by fostering open communication between employees and management of all levels. We provide an avenue where employees can communicate their ideas and feedback.

Employee engagement is a critical component of our business strategy and performance. By engaging with employees, we build trust and create a working environment in which employees are recognised for their invaluable contribution.

Efforts to support our employees are ongoing. Arrangements that allow staff to balance work with other commitments have been introduced and we encourage employee volunteerism. Engagement activities held during the fiscal year include:

• An induction programme for new hires • Festive celebrations with the management team, employees and subcontractors during Hari Raya, Chinese New Year and Deepavali • Get-together lunches • Onsite dinners ANNUAL REPORT 2019 47 SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

FOR OUR PEOPLE (cont’d)

NOTICE PERIOD

Any operational changes occurring that may affect employees are communicated throughout the Group. The Group Human Resource Division provides notice to all employees through email or other electronic modes.

SHLCB has a policy of providing one month’s notice for operational change based on business requirements and individual needs. However, there are occasions where employees are given less time to relocate when the timing is critical. This mostly affects our security guards and the Group assists these employees so they can adapt to the sudden change.

GRIEVANCE HANDLING

SHLCB practises an open-door policy to give all employees the right to approach our top management. We have established a formal grievance handling procedure for employees who feel they have been unfairly treated. Employees have an option to communicate their issues to the relevant people concerned and receive a fair hearing. Any employee may use this formal grievance handling mechanism without fear of reprisals.

Employees should first bring the issue to the attention of their immediate superior within one week. If dissatisfied with the response, the employee may escalate the grievance to higher levels including heads of department, the HR and Administration Department and the Executive Director’s office. Grievances that are not reported within one week are considered as not having arisen.

CAREER DEVELOPMENT

We must ensure that our employees have the necessary knowledge and skills to excel in the industry. These skills must be upgraded regularly to keep abreast with changing needs and technologies.

Training needs analysis is conducted at the beginning of each year. The findings from this research are used to map the Group’s annual training plan. Employees attend our internal training programmes and are encouraged to take part in relevant training programmes hosted by reputable organisations. 48 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

FOR OUR PEOPLE (cont’d)

Examples of External Training Programmes Attended in FY2019

Post Implementation Challenges, New Corporate Mind your Business PLUS Property Sales Rescue Mechanism Rule English 2018 & Malaysian Code of Corporate Governance

Malaysian Private Entities Mastering Revenue MIA International Reporting Standards Recognition from Accountant Conference (MPERS): Recent Contracts with Customers Development & Updates

Tax and regulations Principles of Purchasing Financial Dashboard for for Land and Property and Negotiations Skills Reporting Development

Companies Act 2016

Indicator Unit FY2017 FY2018 FY2019 Average training budget per employee RM 1,000 1,000 1,000 Average number of hours of training per year per Hours 8 8 8 employee Total investments in training (excluding HRDF) RM 38,877.50 37,811.00 41,247.50

PERFORMANCE MEASUREMENT

SHLCB’s performance measurement is a critical tool for aligning employee objectives with the overall priorities of the Group. Our performance management programme encourages regular dialogue between employees and managers in the planning, coaching, monitoring and evaluation of employee performance. Employees receive clear direction on targets for the coming year through this evaluation process.

The performance evaluation of a new employee is ongoing during the first six months of employment until the probationary period has been completed. Underperforming employees attend additional training programmes and the outcome of this process determines job confirmation.

Performance reviews are conducted annually for all full-time employees. Compensation such as pay rises is linked to performance, which is measured by various Key Performance Indicators (KPIs). Both the employee and immediate superior or head of department have an opportunity to discuss performance, gaps and areas for improvement before determining the performance result. ANNUAL REPORT 2019 49 SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

FOR OUR PEOPLE (cont’d)

PERFORMANCE MEASUREMENT (cont’d)

Criteria Measured in Our Annual Performance Review

Work attitude and resourcefulness Skills of Eclectic operation approach to solving problems

Cost-benefit Job knowledge consciousness

Annual Performance Review

Timesheet: Volume and real-time input quality of work

Responsibility Leadership and dependability Teamwork and cooperation

In FY2019, the results achieved in employees’ performance reviews ranged from 60% to 70%. 50 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

FOR OUR PEOPLE (cont’d)

ENSURING A DIVERSE WORKPLACE

We strive to build a diverse workforce that reflects the local population in the areas in which we operate. A variety of minds working together, encouraging new ways of thinking and unique perspectives, enrich our working teams and significantly increase our competitiveness by serving our stakeholders more effectively.

Workforce Strength Workforce Breakdown by Gender

153 151 152 259 106 104 104

256 255

FY2018 FY2019 FY2017 FY2018 FY2019 Female Male

Workforce Breakdown by Workforce Breakdown by Category Nationality

218 245 247 211 210 245

41 44 46 14 10 9

FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 Permanent Non-permanent Malaysians Non-Malaysians

Indicator FY2017 FY2018 FY2019 Turnover (headcount) 52 (20%) 44 (17.3%) 23 (9%)

Employees Turnover by Employees Turnover by Gender Age Group 28 43

29 17 15 11 14 11 15 10 8 7 9 6 6 5 3 1

<30 30-40 >40-50 >50 FY2017 FY2018 FY2019 Female Male FY2017 FY2018 FY2019 ANNUAL REPORT 2019 51 SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

FOR OUR PEOPLE (cont’d)

SAFETY AND HEALTH

Due to the nature of our industry, some of our employees and contractors are inevitably exposed to some risks and health hazards. However, we minimise these risks through rigorous safety measures, proper work procedures and training.

Sin Heap Lee Construction Sdn Bhd Occupational Safety and Health Policy Statement

It shall be the policy of the Company to implement and maintain at all times the highest standards of safety and health for all persons involved in the company’s activities.

It is therefore the responsibility of the line management to ensure that the Occupational Safety and Health objective are implemented, to assist in implementing this policy. Occupational Safety and Health Committee has been set up to provide for staff consultation of safety activities.

Objective:

Within the framework of this policy. The Company strives to:

• Ensure all activities comply with legal requirement in laws and regulations pertaining of Occupational Safety & Health • Prevent all accidents • Prevent all Occupational diseases and promote the health of all our employees • Provide and maintain a safe healthy work environment for our employees • Establish safe work procedures and practices • Provide competent supervision and effective communication systems on safety and health standards • Continuously review and develop our safety and health standards

This safety and health of our employees are of utmost importance. We are committed to achieve these objectives, we expect the same commitment from our employees and contractors.

Several health and safety training programmes were delivered throughout the year. Eight toolbox talks were held to ensure all staff are working safely. They also served as an opportunity for workers to discuss hazards, controls, incidents and accidents.

We conduct regular site inspections that focus on implementing risk controls used by contractors following the work health and safety management plan. The site inspections benchmark the safety practices observed on site against the criteria contained in our checklist.

Safety Checklist Criteria

Fire protection Housekeeping Tools

Scaffolding Barricade x Unsafe practice 52 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

FOR OUR PEOPLE (cont’d)

SAFETY AND HEALTH (cont’d)

Group Safety Indicators

Indicator FY2017 FY2018 FY2019 Fatality cases 0 1 0 Lost Workday Cases (LWC) 0 0 0 Restricted Workday Case (RWC) 0 0 0 Near Miss Cases 1 13 0 Dangerous Occurrence Cases 0 13 0 Fire Cases 0 0 0 Property Damage Cases 0 8 0 Vehicle Accident Cases 0 0 0 No. of Days Lost 0 61 0 Total Safe Man-Hours 151,840 11,200 391,040 Worked 5 7 9

SHLCB SAFETY AND HEALTH COMMITTEE

SHLCB’s safety and health committee comprises a chairman, a secretary and both employer and employee representatives. This structure adheres to Section 30 of the Occupational Health and Safety Act 1994.

Chairman

Leong Chin Cheong

Secretary

Kamarudin Mohd Isa

Employer Employee Representatives Representatives

9 members 5 members

Each employee representative communicates departmental OSH issues to the committee. They also perform in-house workplace inspections and are involved in OSH programmes. ANNUAL REPORT 2019 53 SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

Sustainable Operations

SHLCB sets the standard as one of Malaysia’s leading developers. Offering sustainable living with a healthy lifestyle is the best strategy for the present and also offers sensible solutions for tomorrow.

Our pioneering design and workmanship spirit demonstrate our unrivalled standards in planning sustainable developments that create high-value regenerations. The Group recognises safety and security as being essential for peaceful living. We cross boundaries to provide the safest environment captivated by greenery for a tranquil living experience.

OPERATIONS SAFETY

Whether delivering a project in a densely populated city or a remote town, the line between project and public safety is often blurred.

Our strong safety record is a result of our:

• Unwavering commitment to preventing incidents on every job site • Proactive engagement with local authorities, communities and businesses to advance existing public-safety systems.

• Outsiders are not allowed to enter the construction site without permission; • Visitors must wear safety helmets; • Public liability insurance must be adequate; Site safety • Regular fogging and larviciding is performed to prevent mosquitos from measures breeding.

• Golfers must purchase adequate insurance; • Regular fogging and larviciding is performed at the golf course to prevent mosquitos from breeding; Clubhouse • Public liability insurance must be adequate; safety measures • Emergency exit indicators must be clearly visible in the event of disaster.

QUALITY DELIVERABLE

We ensure that all subcontractors, consultants and other professionals with whom we work have the necessary experience and a proven track record. Regular inspections are performed at each stage of the development until handover. This ensures that each adheres to the specifications and prescribed procedures and methods.

The Group has implemented a Quality Management System in accordance with ISO 9001:2008 54 SHL CONSOLIDATED BHD SUSTAINABILITY STATEMENT (cont’d)

SOCIAL VALUE CREATION (cont’d)

Sustainable Operations (cont’d)

CARING FOR OUR CUSTOMERS

Protecting health and safety in all development properties is a top priority. Several policies have been introduced to safeguard the health and safety of customers by avoiding accidents. Special infrastructure, such as ramps and public toilets, caters to the groups concerned.

Open and green spaces within the built environment enhance aesthetics and satisfaction for our tenants. This greenery improves the urban environment and the wellbeing of both buyers and tenants. All of our properties have large open spaces and lush natural greenery.

A customer satisfaction survey has been conducted for each development project. The survey measures our performance for eight criteria. Our average performance for three of our recent projects is presented below, which consists of:

• A 568-unit condominium at Bandar Sungai Long, Cheras • Goodview Heights Phase 4A, double-storey homes in Kajang • Goodview Heights Phase B, townhouses in Kajang

Customer Satisfaction Summary

69% 67% 67% 67% 66% 63%

61% 59%

Professionalism Responsiveness Timely completion

Construction methodology

Meeting contractualMeeting requirements specification/drawings

Site administration and management

Effectiveness of Qualit Management System

RESPECTING PRIVACY

SHL Consolidated Group ensures that the collection, use and disclosure of any personal data is consistent with the Malaysian Personal Data Protection Act (PDPA) and relevant privacy laws that have been introduced.

Personal information is very important to our customers, employees and other stakeholders and we are committed to protecting it. Great care is taken to ensure this data is kept safe and secure by maintaining physical, electronic and procedural safeguards.

Our data protection and security policies are updated regularly to ensure they meet corporate best practice and reflect the changing needs of a property development company.

Privacy and cookie policies are regularly updated to ensure that our customers know exactly how we store and use their data. Financial Statements

56 Directors’ Report

61 Statement by Directors

61 Statutory Declaration

62 Independent Auditors’ Report

67 Statements of Comprehensive Income

68 Statements of Financial Position

70 Statements of Changes in Equity

72 Statements of Cash Flows

74 Notes to the Financial Statements 56 SHL CONSOLIDATED BHD Directors’ Report for the year ended 31 March 2019

The Directors have pleasure in submitting the Directors’ report and the audited financial statements of the Group and of the Company for the year ended 31 March 2019.

Principal activities

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

Financial results

Group company R M rm’000 rm’000

Profit before taxation 81,712 22,898 Malaysian taxation (12,308) (21)

Profit for the year 69,404 22,877 Other comprehensive income for the year, net of tax (7,443) -

Total comprehensive income for the year 61,961 22,877

Total comprehensive income for the year attributable to: • equity holders of the Company 54,993 22,877 • non-controlling interests 6,968 -

61,961 22,877

Dividends

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

R M rm’000

Dividends paid: • Interim dividend of 8 Sen per share in respect of financial year ended 2018 19,370 • Final dividend of 8 Sen per share in respect of financial year ended 2018 19,370

38,740

Dividend declared: • Interim dividend of 8 Sen per share in respect of financial year ended 2019 19,370

Dividend proposed: • Final dividend of 8 Sen per share in respect of financial year ended 2019 19,370 ANNUAL REPORT 2019 57 Directors’ Report (cont’d) for the year ended 31 March 2019

Movements of reserves and provisions

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

Share capital

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

Share options

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

Directors

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

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

List of Directors of subsidiaries

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

Leong Chin Cheong Y.A.M. Tengku Muhaini Binti Sultan Haji Ahmad Shah Fumiaki Kiyose

Directors’ interests

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

Ordinary shares 1 April 31 March Company 2018 addition Disposal 2019

Direct

Dato’ Sri Yap Teiong Choon 4,283,869 - - 4,283,869 Dato’ Sri Ir. Yap Chong Lee 3,235,519 - (1,400,000) 1,835,519 Wong Tiek Fong 80,000 - - 80,000 Au Lai Koong 5,000 - - 5,000

Indirect

Y.A.M. Tengku Abdul Samad Shah Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 21,222,437 - - 21,222,437 Dato’ Sri Yap Teiong Choon 60,659,844 - - 60,659,844 Dato’ Sri Ir. Yap Chong Lee 91,955,143 1,400,000 - 93,355,143 58 SHL CONSOLIDATED BHD Directors’ Report (cont’d) for the year ended 31 March 2019

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

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

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

Directors’ benefits

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

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

Other statutory information

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

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

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

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

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

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

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

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

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

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

No contingent or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet their obligations when they fall due. ANNUAL REPORT 2019 59 Directors’ Report (cont’d) for the year ended 31 March 2019

Other statutory information (continued)

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

In the opinion of the Directors:

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

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

Subsidiaries

(i) Details of subsidiaries:

Details of subsidiaries are disclosed in Note 10 to the financial statements.

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

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

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

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

Directors’ remuneration

Group company R M rm’000 rm’000

Directors’ fee 266 266 Directors’ emoluments 2,425 36

2,691 302

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

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

Ultimate holding company

The Company is not a subsidiary of another corporation at the end of the financial year. 60 SHL CONSOLIDATED BHD Directors’ Report (cont’d) for the year ended 31 March 2019

Auditors

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

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

On behalf of the Board,

______Dato’ Sri Yap Teiong Choon

______Dato’ Sri Ir. Yap Chong Lee

Kuala Lumpur, 3 July 2019

ANNUAL REPORT 2019 61 Statement by Directors Pursuant to Section 251(2) of the Companies Act 2016

We, Dato’ Sri Yap Teiong Choon and Dato’ Sri Ir. Yap Chong Lee being the Directors of SHL Consolidated Bhd. do hereby state on behalf of the Board of Directors that in our opinion, the financial statements set out on pages 67 to 150 give a true and fair view of the financial position of the Group and of the Company as at 31 March 2019 and of their financial performance, changes in equity and cash flows for the year ended on that date in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

On behalf of the Board,

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

Kuala Lumpur, 3 July 2019

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

I, Wong Tiek Fong, being the Director primarily responsible for the accounting records and financial management of SHL Consolidated Bhd. do solemnly and sincerely declare that the financial statements set out on pages 67 to 150 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by } Wong Tiek Fong } at Kuala Lumpur in the } Federal Territory } on 3 July 2019 } Wong Tiek Fong MIA CA6380

Before me,

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

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of SHL Consolidated Bhd., which comprise the statements of financial position as at 31 March 2019 of the Group and of the Company, and the statementsof comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 67 to 150.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2019 and of their financial performance, changes in equity and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for Opinion

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

Independence and Other Ethical Requirements

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

Key Audit Matters

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

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

Key audit matter How our audit addressed the key audit matter

Revenue recognition for property development activities

For the financial year ended 31 March 2019, Our audit procedures included, amongst others: property development revenue of RM158,913,000/- and cost of sales of RM82,060,000/- (Note 5) ● Reviewed management-prepared budgets accounted for approximately 93% and 92% of the for property development projects. Group’s revenue and cost of sales respectively. ● Obtained an understanding of the process The Group recognises property development in deriving the stage of completion which activities over time using the stage of completion includes verifying the certified work done such method. The stage of completion is measured as examining progress claims from contractors based on the: and architect certification.

● Verified the budgeted costs against the letter of award issued to contractors. ANNUAL REPORT 2019 63 Independent Auditors’ Report (cont’d) To The Members of SHL Consolidated Bhd.

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

Revenue recognition for property development activities (continued)

● Group’s efforts or inputs to the satisfaction of ● Performed analytical reviews including the performance obligations (i.e. by reference reasonableness test on the percentage of to the property development costs incurred completion and profit recognition. up to the end of the reporting period as a percentage of total estimated costs for the ● Verified the gross development value against complete satisfaction of the development the signed sale and purchase agreements project); and and estimated selling price of unsold property units to latest transacted selling price. ● physical proportion of contract work-to-date certified by professional consultants ● Corroborated the certified stage of completion with the level of completion based on actual Revenue and cost recognised on property costs incurred to date over the estimated total development activities have an inherent risk property development costs. of misstatements as it involve judgements and estimates. We focused on this area because ● Observed the progress of significant on-going there is key judgement involved in determining the projects by performing a site visit. following: Based on the procedures performed, we ● Stage of completion; are satisfied with the recognition of property ● Extent of property development costs incurred development revenue and costs. to date; and ● Estimated total property development costs.

Accordingly, we determined this to be a key audit matter.

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

Fair value of investment properties

As at 31 March 2019, the Group’s investment Our audit procedures included, amongst others: properties that are measured at fair value amounted to RM69,880,000/- (Note 12), which ● Reviewed the basis of valuation adopted, represents 7% of the Group’s total assets. considered and challenged the assumptions used in the valuation model. The Group determines the fair value of its investment properties by reference to selling prices of recent ● Assessed management’s estimated fair values transactions and asking prices of similar properties by making reference to comparable property of a nearby location. transactions.

We focused on this area in our audit due to ● Performed a site visit on major properties. complexities in determining fair values of the investment properties, which involved significant Based on the procedures performed, we are judgements in estimating the underlying satisfied with the Group’s valuation of investment assumptions to be applied. properties.

[Refer to Note 3.4(ii) (c) for key sources of estimation uncertainty.] 64 SHL CONSOLIDATED BHD Independent Auditors’ Report (cont’d) To The Members of SHL Consolidated Bhd.

Information other than the Financial Statements and Auditors’ Report thereon

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

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

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

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

Responsibilities of the Directors for the Financial Statements

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ANNUAL REPORT 2019 65 Independent Auditors’ Report (cont’d) To The Members of SHL Consolidated Bhd.

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

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

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

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

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

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

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

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

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

Other Matters

Unaudited Comparative Information

As stated in Note 3.1 to the financial statements, SHL Consolidated Bhd. adopted Malaysian Financial Reporting Standards, International Financial Reporting Standards on 1 April 2018 with a transition date of 1 April 2017. These standards were applied retrospectively by Directors to the comparative information in these financial statements, including the statements of financial position of the Group and of the Company as at 31 March 2018 and 1 April 2017, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year ended 31 March 2018 and related disclosures.

We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 March 2019, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 April 2018 do not contain misstatements that materially affect the financial position as at 31 March 2019 and financial performance and cash flows for the year then ended. 66 SHL CONSOLIDATED BHD Independent Auditors’ Report (cont’d) To The Members of SHL Consolidated Bhd.

Other Matters (continued)

Reporting Responsibility

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

Khoo Wong & Chan ong Lam Hock @ Tan Ah Lam Chartered Accountants Partner (AF: 0736) 03267/07/2020J Chartered Accountant

Kuala Lumpur, 3 July 2019

ANNUAL REPORT 2019 67 Statements of Comprehensive Income for the year ended 31 March 2019

Group Company N note 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Revenue 5 171,242 180,542 22,489 19,432 Cost of sales 5 (89,097) (95,336) - -

Gross profit 82,145 85,206 22,489 19,432 Other operating income 13,043 13,235 944 1,383 Distribution costs (3,879) (6,783) - - Administration expenses (9,898) (10,405) (535) (471) Finance costs (21) (49) - - Profit from associate 322 1,152 - -

Profit before taxation 6 81,712 82,356 22,898 20,344 Taxation 7 (12,308) (12,642) (21) (7)

Profit for the year 69,404 69,714 22,877 20,337 Other comprehensive income: • realisation of deferred tax liability upon disposal of revalued assets 70 175 - - • effect of a change in imposition of tax rates (7,513) - - -

(7,443) 175 - -

Total comprehensive income for the year 61,961 69,889 22,877 20,337

Profit for the year attributable to: • equity holders of the Company 62,436 69,124 22,877 20,337 • non-controlling interests 10 6,968 590 - -

69,404 69,714 22,877 20,337

Total comprehensive income for the year attributable to: • equity holders of the Company 54,993 69,299 22,877 20,337 • non-controlling interests 10 6,968 590 - -

61,961 69,889 22,877 20,337

Sen Sen Earnings per share Basic and fully diluted 8 25.78 28.55

The annexed notes form an integral part of the financial statements. 68 SHL CONSOLIDATED BHD Statements of Financial Position as at 31 March 2019

Group N note 31/3/2019 31/3/2018 1/4/2017 R rm rm rm

ASSETS Non-current assets Property, plant and equipment 9 201,155 206,150 215,166 Investment in associate 11 10,536 10,214 15,437 Investment properties 12 69,880 69,880 69,880 Investments 13 24 24 24 Inventories 14 2,749 2,745 2,740 Trust account 2,192 2,397 2,399 Deferred tax assets 15 5,311 4,924 1,611 Trade receivables 16 20 547 2,322

291,867 296,881 309,579

Current assets Inventories 14 269,169 237,735 207,171 Trade receivables 16 20,605 27,608 79,452 Contract assets 18 95,010 - 260 Other receivables 19 7,643 7,806 8,184 Current tax assets 497 477 2,057 Cash, deposits and short-term investments 20 308,698 370,774 290,420

701,622 644,400 587,544

993,489 941,281 897,123

EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 21 247,726 247,726 242,124 Reserves 22 556,751 542,748 508,106

804,477 790,474 750,230 Non-controlling interests 10 80,268 61,572 18,610

TOTAL EQUITY 884,745 852,046 768,840

Non-current liabilities Deferred tax liabilities 15 32,086 21,235 21,983 Finance lease liabilities 23 10 220 604 Club establishment fund 24 10,756 10,988 11,022

42,852 32,443 33,609

Current liabilities Trade payables 25 21,992 25,340 23,505 Contract liabilities 18 36,298 20,331 59,504 Other payables 26 6,570 7,168 8,367 Current tax liabilities 822 3,570 2,793 Finance lease liabilities 23 210 383 505

65,892 56,792 94,674

TOTAL LIABILITIES 108,744 89,235 128,283

TOTAL EQUITY AND LIABILITIES 993,489 941,281 897,123

The annexed notes form an integral part of the financial statements. ANNUAL REPORT 2019 69 Statements of Financial Position as at 31 March 2019 (cont’d)

Company N note 31/3/2019 31/3/2018 1/4/2017 R rm rm rm

ASSETS Non-current assets Investment in subsidiaries 10 424,307 423,407 422,024

Current assets Amounts due from subsidiaries 17 49,795 71,195 82,211 Other receivables 19 10 5 - Cash, deposits and short-term investments 20 4,187 1,559 640

53,992 72,759 82,851

478,299 496,166 504,875

EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 21 247,726 247,726 242,124 Reserves 22 161,797 177,660 191,980

TOTAL EQUITY 409,523 425,386 434,104

Current liabilities Amounts due to subsidiaries 17 68,744 70,744 70,744 Other payables 26 27 35 26 Current tax liabilities 5 1 1

68,776 70,780 70,771

TOTAL LIABILITIES 68,776 70,780 70,771

TOTAL EQUITY AND LIABILITIES 478,299 496,166 504,875

The annexed notes form an integral part of the financial statements. 70 SHL CONSOLIDATED BHD Statements of Changes in Equity for the year ended 31 March 2019

total attributable to equity holders non- Group Note Share Share *Other retained of the controlling total 2019 capital premium reserves profits Company interests equity rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

At 1 April 2018: As previously reported 247,726 - (27,995) 570,743 790,474 61,572 852,046 Effect of adopting MFRS 9 34 - - - (2,250) (2,250) - (2,250)

247,726 - (27,995) 568,493 788,224 61,572 849,796

Profit for the year - - - 62,436 62,436 6,968 69,404 Other comprehensive income for the year - - (7,443) - (7,443) - (7,443) Total comprehensive income for the year - - (7,443) 62,436 54,993 6,968 61,961

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

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

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

2018

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

Profit for the year - - - 69,124 69,124 590 69,714 Other comprehensive income for the year - - 175 - 175 - 175 Total comprehensive income for the year - - 175 69,124 69,299 590 69,889 Transfer in accordance with Section 618(2) of the Companies Act 2016 5,602 (1,225) (4,377) - - - -

Purchase of indirect subsidiary - - - - - 42,372 42,372 Transfer within reserves: • realisation of revaluation surplus - - (699) 699 - - - Dividends 27 - - - (29,055) (29,055) - (29,055)

Transactions with owners - - (699) (28,356) (29,055) 42,372 13,317

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

*Analysis of other reserves: revaluation capital merger Group surplus reserves deficit Total 2019 rm’000 rm’000 rm’000 rm’000

At 1 April 2018 95,806 6,663 (130,464) (27,995) Total comprehensive income for the year: • other comprehensive income for the year (7,443) - - (7,443) Transfer within reserves: • realisation of revaluation surplus (282) - - (282) At 31 March 2019 88,081 6,663 (130,464) (35,720)

The annexed notes form an integral part of the financial statements. ANNUAL REPORT 2019 71 Statements of Changes in Equity for the year ended 31 March 2019 (cont’d)

*Analysis of other reserves: (continued)

revaluation capital merger Group surplus reserves deficit Total 2018 rm’000 rm’000 rm’000 rm’000

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

At 31 March 2018 95,806 6,663 (130,464) (27,995)

Share Share *Other retained total Company capital premium reserves profits equity 2019 Note rm’000 rm’000 rm’000 rm’000 rm’000

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

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

2018

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

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

*Analysis of other reserves:

merger capital Company reserve reserve total 2019 rm’000 rm’000 rm’000

At 1 April 2018 and 31 March 2019 - 23,361 23,361

2018

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

At 31 March 2018 - 23,361 23,361

The annexed notes form an integral part of the financial statements. 72 SHL CONSOLIDATED BHD Statements of Cash Flows for the year ended 31 March 2019

Group Company N note 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Cash flows from operating activities Profit before taxation 81,712 82,356 22,898 20,344

Adjustments for: Depreciation 2,884 5,895 - - (Gain)/loss on disposal of property, plant and equipment 1 (3) - - Derecognition of: • property, plant and equipment 396 - - - • reversal of impairment loss of subsidiaries - - (900) (1,383) Fair value gain on short-term investments (1,158) (313) - - Gain from previously derecognised subsidiary (44) - (44) - Interest expenses 21 49 - - Interest income (10,972) (12,703) (89) (32) Dividend income - - (22,400) (19,400) Profit from associate (322) (1,152) - -

Operating profit/(loss) before working capital changes 72,518 74,129 (535) (471) (Increase)/decrease in inventories (27,984) (15,479) - - (Increase)/decrease in receivables (89,567) 54,257 21,395 11,011 Increase/(decrease) in payables 12,021 (38,537) (2,008) 9

Cash generated from/(absorbed by) operations (33,012) 74,370 18,852 10,549 Tax paid (12,982) (14,385) (18) (7) Tax refunded 927 214 1 -

Net cash from/(used in) operating activities (45,067) 60,199 18,835 10,542

The annexed notes form an integral part of the financial statements. ANNUAL REPORT 2019 73 Statements of Cash Flows for the year ended 31 March 2019 (cont’d)

Group Company N note 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Cash flows from investing activities Claim received from trust account 442 254 - - Payment to trust account (237) (252) - - Purchase of: • property, plant and equipment (1,743) (11,964) - - • land held for property development (5) (5) - - Proceeds from disposal of property, plant and equipment 8 3 - - Purchase of short-term investments (150,000) (10,000) - - Reinvestment of short-term investments (4,481) (5,643) - - Proceeds from disposal of short-term investments 159,937 - - - Proceeds from redemption of short-term investments 5,662 5,500 - - Interest received 10,972 12,703 89 32 Capital repayment from previously derecognised subsidiary 44 - 44 - Dividends received from subsidiaries - - 22,400 19,400 Dividend received from associate - 6,375 - -

Net cash from/(used in) investing activities 20,599 (3,029) 22,533 19,432

Cash flows from financing activities Repayment of club members’ deposits (232) (34) - - Payment of finance lease liabilities (383) (506) - - Interest paid (21) (49) - - Dividends paid to: • owners of the Company (38,740) (29,055) (38,740) (29,055) • non-controlling interests (2,000) - - - Proceeds of shares issued to indirect non-controlling interests 13,728 42,372 - -

Net cash from/(used in) financing activities (27,648) 12,728 (38,740) (29,055)

Net increase/(decrease) in cash and cash equivalents (52,116) 69,898 2,628 919 Cash and cash equivalents at 1 April 210,323 140,425 1,559 640

Cash and cash equivalents at 31 March 158,207 210,323 4,187 1,559

Analysis of cash and cash equivalents Cash and deposits 20 158,207 210,323 4,187 1,559

The annexed notes form an integral part of the financial statements. 74 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019

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

1. General information

1.1 principal activities

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

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

1.2 legal form and domicile

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

1.3 Registered office and principal place of business

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

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

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

1.4 authorisation for issue

The financial statements were authorised for issue by the Directors on 3 July 2019.

2. Financial risk management policies

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

The main areas of financial risks faced by the Group and by the Company and the policies in respect of the major areas of treasury activity are set out as follows: ANNUAL REPORT 2019 75 Notes to the Financial Statements 31 March 2019 (cont’d)

2. Financial risk management policies (CONTINUED)

2.1 interest rate risk

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

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

2.2 market risk

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

2.3 credit risk

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

2.4 Liquidity and cash flow risks

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

3. basis of preparation

3.1 Statement of compliance

The consolidated financial statements of the Group “Group” and separate financial statements of the Company “Company” comply with Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRSs) and the requirements of the Companies Act 2016 in Malaysia. These financial statements also comply with the applicable disclosure provisions of the Listing Requirements of the Bursa Malaysia Securities Berhad.

In previous year, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (FRSs). These are the Group and the Company’s first financial statements prepared in accordance with MFRSs.

3.2 basis of measurement

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

3.3 Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (RM), which is the Group and the Company’s functional currency. All financial information presented in RM had been rounded to the nearest thousand. 76 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

3. basis of preparation (CONTINUED)

3.4 Use of estimates and judgements

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

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

Estimates and judgements

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

(i) Critical judgement made in applying accounting policies

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

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

(ii) Key sources of estimation uncertainty

(a) Revenue recognition from property development activities

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

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

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

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

Significant judgment is required in determining the:-

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

• Progress towards complete satisfaction of that performance obligation based on the certified work-to-date corroborated by the level of completion ofthe development based on actual costs incurred to date over the estimated total property development costs. ANNUAL REPORT 2019 77 Notes to the Financial Statements 31 March 2019 (cont’d)

3. basis of preparation (CONTINUED)

3.4 Use of estimates and judgements (continued)

(ii) Key sources of estimation uncertainty (continued)

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

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

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

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

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

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

The carrying amounts of the Group’s land and buildings and investment properties as at the end of the financial year are disclosed in Notes 9 and 12 to the financial statements respectively.

(d) Impairment of investment in subsidiaries and associate

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

The carrying amounts of the Group and the Company’s subsidiaries and associate as at the end of the financial year are disclosed in Notes 10 and 11 to the financial statements respectively. 78 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

3. basis of preparation (CONTINUED)

3.4 Use of estimates and judgements (continued)

(ii) Key sources of estimation uncertainty (continued)

(e) Valuation of inventories

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

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

The carrying amount of the Group’s inventories as at the end of the financial year is disclosed in Note 14 to the financial statements.

(f) Impairment loss for financial assets and contract assets

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

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

4. Significant accounting policies

4.1 malaysian Financial Reporting Standards Framework (MFRS Framework)

• Transition from FRS Framework to MFRS Framework • New MFRSs, Amendments to MFRSs and Annual Improvements to MFRSs (‘MFRS Standards’) that are effective for financial periods beginning on 1 January 2018

As disclosed in Note 3.1, these are the Group and the Company’s first financial statements prepared in accordance with MFRSs, including MFRS 1 “First-time Adoption of Malaysian Financial Reporting Standards”.

Following the adoption of MFRS Framework, the Group and the Company have also adopted the following applicable MFRS Standards that are effective for financial periods beginning on 1 April 2018:-

Effective for financial periods beginning on or after 1 January 2018 • MFRS 9 Financial Instruments • MFRS 15 Revenue from Contracts with Customers • Amendments to MFRS 140 Investment Property • Annual Improvements to MFRS Standards 2014 – 2016 Cycle ANNUAL REPORT 2019 79 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.1 malaysian Financial Reporting Standards Framework (MFRS Framework) (continued)

The accounting policies as disclosed in Note 4 to the financial statements have been applied in preparing:-

• the financial statements of the Group and the Company for the financial year ended 31 March 2019; • the comparative information presented in these financial statements for the financial year ended 31 March 2018; and • the opening MFRS statements of financial position as at 1 April 2017 (i.e. the transition date)

The effect of transition from FRSs to MFRSs and the adoption of new MFRS Standards are disclosed in Note 34 to the financial statements.

There are no adjustments arising from the transition to MFRSs and adoption of MFRS Standards, except for those discussed in Note 34. Accordingly, notes relating to the statements of financial position as at the date of transition to MFRSs are only presented for those items.

4.2 new MFRSs, Amendments to MFRS, Annual Improvements to MFRS and IC Interpretation (‘Standards’) that are yet to be effective for current financial year

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

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

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

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

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

4.3 Consolidated financial statements

(i) Subsidiaries

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

• has power over the investee; • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power to affect its returns. 80 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.3 Consolidated financial statements (continued)

(i) Subsidiaries (continued)

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

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

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

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

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

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

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

(a) the sum of:

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

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

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

All intragroup transactions, balances and unrealised gains and losses are eliminated in full. Intragroup unrealised losses may indicate an impairment that requires recognition in the consolidated financial statements. ANNUAL REPORT 2019 81 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.3 Consolidated financial statements (continued)

(i) Subsidiaries (continued)

Loss of control

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

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

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

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

Transactions with non-controlling interests

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

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

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

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

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

(ii) Business combination under common control

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

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

The difference in the cost of combination over the aggregate carrying amounts of the assets and liabilities of the combining entities as at the date of the combination is recognised directly in equity. Transaction costs for the combination are recognised as expenses in the profit or loss. 82 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.3 Consolidated financial statements (continued)

(iii) Associates

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

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

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

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

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

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

When significant influence ceases, the disposal proceeds, if any, and the fair value of any retained investment are compared to the carrying amount of the investment as at that date. The difference together with any accumulated exchange differences that relate to the associate is recognised in the profit or loss as gain or loss on disposal of the associate. The remaining investment retained in the previous associate is subsequently accounted for as a financial asset at fair value through other comprehensive income in accordance with MFRS 9 (2018: an available-for-sale financial asset in accordance with FRS 139).

4.4 revenue and income recognition

Revenue from contracts with customers is recognised by reference to each distinct performance obligation in the contracts with customers. Revenue from contracts with customers is measured at its transaction price, being the amount of consideration which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, net of indirect taxes, returns, rebates and discounts. Transaction price is allocated to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time. ANNUAL REPORT 2019 83 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.4 revenue and income recognition (continued)

(i) Revenue from property development

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

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

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

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

The Group recognises revenue over time based on the:-

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

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

The Group recognises sales at a point in time for the sale of completed properties, when the control of the properties has been transferred to the purchasers, being when the properties have been completed and delivered to the customers and it is probable that the Group will collect the considerations to which it will be entitled to in exchange for the assets sold. 84 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.4 revenue and income recognition (continued)

(ii) Revenue from construction contracts

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

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

(iii) Income from sales of goods and services

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

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

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

(iv) Rental income

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

(v) Interest income

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

(vi) Investment income

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

4.5 Employee benefits

(i) Short-term benefits

Wages, salaries, bonuses and social security contributions are recognised as expenses in the period in which the associated services are rendered by employees of the Group and of the Company. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. ANNUAL REPORT 2019 85 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.5 Employee benefits (continued)

(ii) Defined contribution plans

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

4.6 borrowing costs

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

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

4.7 Income taxes

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

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

Current tax

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

Deferred tax

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

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

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

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

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

In all other cases, the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. 86 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.7 Income taxes (continued)

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

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

4.8 revaluations

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

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

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

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

4.9 Fair value measurement

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

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

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

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

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. ANNUAL REPORT 2019 87 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.9 Fair value measurement (continued)

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

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

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

4.10 impairment of assets

(i) Non-financial assets

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

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

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

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

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

88 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.10 impairment of assets (continued)

(ii) Financial assets

The Group and the Company apply the impairment requirements for financial assets under MFRS 9 “Financial Instruments” for the financial year ended 31 March 2019. The comparative information for financial year 2018 was not restated, and the impairment requirements under the previous FRS 139 “Financial Instruments: Recognition and Measurement” were still applied.

The changes in the impairment requirements and their impact are disclosed in Note 34.2 to the financial statements.

Impairment assessment for the financial year ended 31 March 2019

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

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

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

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

The Group and the Company measure the allowance for impairment loss on cash and deposits based on the two-step approach as follows:-

(a) 12-month expected credit loss

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

(b) Lifetime expected credit loss

For a financial asset for which there is a significant increase in credit risk since initial recognition, a lifetime expected credit loss for that financial asset is recognised as the allowance for impairment loss by the Group and the Company. If in a subsequent period, the significant increase in credit risk since initial recognition is no longer evident, the Group and the Company revert the allowance for impairment loss measurement from lifetime expected credit loss to 12-month expected credit loss. ANNUAL REPORT 2019 89 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.10 impairment of assets (continued)

(ii) Financial assets (continued)

Impairment assessment for the financial year ended 31 March 2019 (continued)

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

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

Impairment assessment for the financial year ended 31 March 2018

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

Available-for-sale financial assets

(a) Quoted instruments:

○ Equity instruments:

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

• significant financial difficulty of the issuer or obligor;

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

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

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

No reversal of impairment losses in profit or loss on available-for-sale equity investments in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. 90 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.10 impairment of assets (continued)

(ii) Financial assets (continued)

Impairment assessment for the financial year ended 31 March 2018 (continued)

(a) Quoted instruments (continued):

○ Debt instruments:

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

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

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

(b) Unquoted instruments:

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

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

Loans and receivables

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

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

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

• the Group and the Company’s past experience of collecting payments; • an increase in the number of delayed payments in the portfolio past the average credit period; and • observable changes in national or local economic conditions that correlate with default on receivables ANNUAL REPORT 2019 91 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.10 impairment of assets (continued)

(ii) Financial assets (continued)

Loans and receivables (continued)

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

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

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

4.11 property, plant and equipment

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

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

The principal annual rates adopted are as follows:-

Long leasehold land - 87 years Buildings - 1% to 2% Plant & machinery - 3% to 20% Motor vehicles - 20% Furniture, fittings & equipment - 10% to 20%

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

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

Depreciation of plant and machinery has been revised from 9% - 20% to 3% - 20% per annum on a straight line basis based on the recent review of the estimated current and future useful lives of the plant and machinery.

Accordingly, the Directors are of the opinion that the change in the accounting estimate has no retrospective effect on the financial statements.

92 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.12 investments in subsidiaries and associates

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

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

4.13 investment properties

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

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

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

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

4.14 Goodwill

Goodwill is measured at cost less accumulated impairment losses.

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

(a) the sum of:

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

(b) the Group’s share of the fair value of the identifiable net assets acquired at the acquisition date. ANNUAL REPORT 2019 93 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.14 Goodwill (continued)

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

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

4.15 Exploration cost

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

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

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

4.16 inventories

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

Cost is determined on the following bases:-

category Basis

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

(a) Land held for property development

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

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

Such asset is transferred to property development costs when development activities have commenced and when it can be demonstrated that the development activities can be completed within the normal operating cycle. 94 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.16 inventories (continued)

(b) Property development costs

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

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

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

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

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

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

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

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

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

4.17 contract assets / (liabilities)

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

Contract liabilities are the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when performance obligations are satisfied. In the case of property development, contract liabilities are the excess of the billings to- date over the cumulative revenue recognised. In the case of construction contracts, contract liabilities are the excess of the billings-to-date over cumulative costs plus attributable profits less recognised losses. ANNUAL REPORT 2019 95 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.18 Financial instruments

The Group and the Company apply the classification and measurement requirements for financial assets under MFRS 9 “Financial Instruments” for the financial year ended 31 March 2019. The comparative information for financial year 2018 was not restated, and the classification and measurement requirements under the previous FRS 139 “Financial Instruments: Recognition and Measurement” were still applied.

The changes in the classification and measurement requirements and their impact are disclosed in Note 34.2 to the financial statements.

The Group and the Company determine the classification of financial assets upon initial recognition. The measurement for each classification of financial assets under MFRS 9 “Financial Instruments” for the financial year ended 31 March 2019 and FRS 139 “Financial Instrument: Recognition and Measurement” for the financial year ended 31 March 2018 are as below:-

(i) Financial assets

Categories in the financial year ended 31 March 2019

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

Financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a financing component is initially measured at the transaction price.

The Group and the Company categorise their financial assets as follows:-

(a) Amortised costs

Financial assets that are debt instruments are measured at amortised cost if they are held within a business model whose objective is to collect contractual cash flows and have contractual terms which give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

(b) Fair value through other comprehensive income (FVOCI)

(i) Debt investments

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

Subsequent to initial recognition, debt investments are measured at fair value. Any gains or losses arising from the changes in fair value of these financial assets are recognised in other comprehensive income, except impairment losses, exchange differences and interest income which are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. 96 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.18 Financial instruments (continued)

(i) Financial assets (continued)

(b) Fair value through other comprehensive income (FVOCI) (continued)

(ii) Equity investments

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

Subsequent to initial recognition, equity investments are measured at fair value. Any gains or losses arising from the changes in fair value of these investments are recognised in other comprehensive income and are not subsequently reclassified to profit or loss.

All financial assets not measured at amortised cost or FVOCI as described above are measured at FVTPL.

Financial assets categorised as FVTPL are subsequently measured at their fair value. Net gains or losses, including any interest or dividend income, are recognised in the profit or loss.

Categories in the financial year ended 31 March 2018

A financial asset is recognised in the statements of financial position when, andonly when, the Group and the Company become a party to the contractual provisions of the instrument. When a financial asset is recognised initially, it is measured at fair value plus directly attributable transaction costs.

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

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

At the reporting date, the Group and the Company have financial assets categorised as at fair value through profit or loss, available-for-sale and loans and receivables.

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

Financial assets at fair value through profit or loss include:

• financial assets held for trading; and

• financial assets designated upon initial recognition at fair value through profit or loss ANNUAL REPORT 2019 97 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.18 Financial instruments (continued)

(i) Financial assets (continued)

Categories in the financial year ended 31 March 2018 (continued)

(a) Financial assets at fair value through profit or loss (continued)

Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives are also categorised as held for trading unless they are designated as hedges.

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 of the financial assets are recognised in profit or loss.

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

• exchange differences; • interest income; and • dividend income.

(b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are designated in this category upon initial recognition. Subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Changes in the fair value of available- for-sale financial assets are recognised in other comprehensive income, except for impairment loss and foreign exchange gains and losses on monetary assets which are recognised in profit or loss.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. 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.

A financial asset is derecognised when the contractual rights 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 settlement date, i.e. the date that the asset is delivered to or by the Group and the Company. 98 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.18 Financial instruments (continued)

(ii) Financial liabilities

A financial liability is recognised in the statements of financial position when, andonly when, the Group and the Company become a party to the contractual provisions of the instrument. When a financial liability is recognised initially, it is measured at fair value plus directly attributable transaction costs.

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

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

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

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

Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.

(iii) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

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

4.19 Financial guarantee contracts

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

Financial guarantees are initially measured at their fair values plus transaction costs in the statements of financial position. Subsequent to initial measurement, financial guarantees are amortised to profit or loss over the period of the subsidiaries’ borrowings, unless it is probable that the Group and the Company will reimburse the bank for an amount higher than the unamortised amount. In this case, an estimate of the obligation is made and recognised as a provision in the statements of financial position. ANNUAL REPORT 2019 99 Notes to the Financial Statements 31 March 2019 (cont’d)

4. Significant accounting policies (CONTINUED)

4.20 leases

(i) Finance leases

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

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

(ii) Operating leases

(a) The Group as lessor

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

(b) The Group as lessee

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

4.21 provisions

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

4.22 cash and cash equivalents

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

5. Revenue and cost of sales

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

Revenue of the Company represents dividend and interest income. 100 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

5. Revenue and cost of sales (CONTINUED)

Revenue and cost of sales consist of the following:

Group C company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Revenue: Revenue from contracts with customers: • Property development 158,913 167,702 - - • Sale of goods and services 9,273 10,545 - -

168,186 178,247 - - Revenue from other sources: • Investments 3,056 2,295 22,489 19,432

171,242 180,542 22,489 19,432

Disaggregated of revenue from contracts with customers: Major goods and services: • Property development revenue 158,483 163,485 - - • Sale of completed development units - 4,217 - - • Sale of land 430 - - - • Sale of goods 370 914 - - • Sale of services 8,903 9,631 - -

168,186 178,247 - -

Timing of revenue from contracts with customers: • Over time 167,386 173,116 - - • At a point in time 800 5,131 - -

168,186 178,247 - -

Cost of sales: Property development: • current year 82,058 83,965 - - • adjustment for previous year 2 - - -

82,060 83,965 - - Inventories 1 2,930 - - Sale of goods and services 5,831 7,349 - - Investments 1,205 1,092 - -

89,097 95,336 - - ANNUAL REPORT 2019 101 Notes to the Financial Statements 31 March 2019 (cont’d)

6. profit before taxation

This is arrived at:-

Group C company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

After charging all expenses including: Directors’ fee 266 205 266 205 Auditors’ remuneration:- Audit fees: • current year 170 154 25 22 • adjustment for prior year (8) (4) 1 3 Other professional fees 73 63 - - Employee benefits expense: Directors’ emoluments: • others 36 24 36 24 Other employees’ emoluments and benefits: • salaries and bonus 10,895 11,002 - - • defined contribution plans 1,174 1,136 - - • others 1,345 1,499 - -

13,414 13,637 - -

Rent of land and buildings 195 153 - - Finance lease interest 21 49 - - Depreciation of property, plant and equipment 2,884 5,895 - - Loss on disposal of property, plant and equipment 1 - - - Derecognition of property, plant and equipment 396 - - - Allowance for impairment on: • receivables 18 525 - - • contract assets 981 - - - Direct operating expenses of investment properties which generated rental income 1,205 1,092 - -

102 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

6. profit before taxation (CONTINUED)

Group Company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

And crediting all income including: Gross dividends from subsidiaries - - 22,400 19,400 Rent of land and buildings from investment properties 2,580 1,955 - - Rental income: • others 188 108 - - Interest income: • short-term investments 4,481 5,642 - - • short-term deposits 6,464 7,025 89 32 • others 27 36 - -

10,972 12,703 89 32 Gain on disposal of property, plant and equipment - 3 - - Reversal of allowance for impairment on receivables 3 1 - - Reversal of impairment for subsidiaries - - 900 1,383 Derecognition of allowance for impairment on receivables 15 18 - - Fair value gain on short-term investments 1,158 313 - - Gain from previously derecognised subsidiary 44 - 44 -

7. taxation

Group C company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Malaysian: Current tax expense/(income): • current year 9,333 16,562 21 7 • adjustment for previous year (46) (34) - -

9,287 16,528 21 7 Deferred tax expense/(income): Origination and reversal of temporary differences: • current year 4,684 (3,912) - - • adjustment for previous year (3,317) 26 - - • effect of a change in imposition of tax rate 1,654 - - -

3,021 (3,886) - -

12,308 12,642 21 7 ANNUAL REPORT 2019 103 Notes to the Financial Statements 31 March 2019 (cont’d)

7. taxation (continued)

The tax reconciliation is as follows:-

Group C company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Taxation based on Malaysian application statutory tax rate of 24% 19,611 19,765 5,496 4,883 Disallowable expenses for tax purposes 1,294 582 128 112 Non-taxable income for tax purposes: • profit from associate (77) (276) - - • tax-exempt dividend - - (5,376) (4,656) • reversal of impairment losses - - (216) (332) • others (6,686) (7,323) (11) - Taxes for previous year (3,363) (8) - - Effect of reduction in tax rates - (9) - - Effect of a change in imposition of tax rate 1,654 - - - Unrecognised deferred tax assets 9 83 - - Benefit from previously unrecognised deferred tax assets (152) (147) - - Others 18 (25) - -

Taxation recognised in profit or loss 12,308 12,642 21 7

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

8. earnings per share

The calculation of basic earnings per share of the Group is based on the net profit attributable to ordinary shareholders amounting to approximately RM62,436,000/- (2018: RM69,124,000/-) and the number of ordinary shares outstanding during the financial year of 242,124,000 (2018: 242,124,000).

Diluted earnings per share

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

104 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

9. property, plant and equipment

Freehold long Furniture, land & leasehold Plant & Motor fittings & Group buildings land machinery vehicles equipment total 2019 RM’000 rm’000 rm’000 rm’000 rm’000 rm’000

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

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

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

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

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

At 31 March 2019 ------

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

ANNUAL REPORT 2019 105 Notes to the Financial Statements 31 March 2019 (cont’d)

9. property, plant and equipment (continued)

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

Cost/valuation: At 1 April 2017 191,555 2,874 75,400 7,550 6,102 283,481 Additions 8,869 1,604 1,151 100 240 11,964 Disposals - - - (50) (8) (58) Derecognition - - (81) - (21) (102) Transfer to property development costs (15,086) - - - - (15,086)

At 31 March 2018 185,338 4,478 76,470 7,600 6,313 280,199

Accumulated depreciation: At 1 April 2017 1,550 134 41,469 6,903 4,117 54,173 Charge for the year 360 43 4,671 334 487 5,895 Disposals - - - (50) (8) (58) Derecognition - - (81) - (21) (102) Transfer to property development costs (1) - - - - (1)

At 31 March 2018 1,909 177 46,059 7,187 4,575 59,907

Accumulated impairment losses: At 1 April 2017 and 31 March 2018 - - 14,142 - - 14,142

Carrying amount: At 31 March 2018 183,429 4,301 16,269 413 1,738 206,150

106 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

9. property, plant and equipment (continued)

Analysis of valuation of land & buildings:

Group 2019 2018 RM’000 rm’000

At cost: • freehold land and buildings 9,768 9,766 • long leasehold land 500 3,660

10,268 13,426 At 2015 valuation: • freehold land and buildings 175,572 175,572 • long leasehold land 818 818

176,390 176,390

186,658 189,816

Fair value measurement of freehold land and buildings

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

Group 2019 2018 RM’000 rm’000

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

176,390 176,390

Level 3 fair value

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

Estimation uncertainty and key assumptions

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

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

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

ANNUAL REPORT 2019 107 Notes to the Financial Statements 31 March 2019 (cont’d)

9. property, plant and equipment (continued)

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

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

Group 2019 2018 RM’000 rm’000

At 1 April 176,390 191,376 Transfer to property development costs - (14,986)

At 31 March 176,390 176,390

Policy on transfer between levels

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

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

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

Group 2019 2018 RM’000 rm’000

At cost: Freehold land and buildings 25,645 25,643 Long leasehold land 251 251

25,896 25,894 Accumulated depreciation: Freehold land and buildings 3,923 3,757 Long leasehold land 68 65

3,991 3,822 Carrying amount: Freehold land and buildings 21,722 21,886 Long leasehold land 183 186

21,905 22,072

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

Group 2019 2018 RM’000 rm’000

Plant and machinery 799 1,148 Motor vehicles 124 295

923 1,443

108 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

10. investment in subsidiaries

Unquoted shares

Company 2019 2018 RM’000 rm’000

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

Accumulated impairment losses: At 1 April 23,224 24,607 Reversal (900) (1,383)

At 31 March 22,324 23,224

Carrying amount: At 31 March 424,307 423,407

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

issued Effective name of company equity capital holding principal activities RM rm 2019 2018 % %

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

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

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

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

• Sin Heap Lee Brickworks 35,600,000 100 100 Manufacturing of clay- Sdn. Bhd. bricks, supply of finished brickworks of wall and other brick structures ANNUAL REPORT 2019 109 Notes to the Financial Statements 31 March 2019 (cont’d)

10. investment in subsidiaries (continued)

issued Effective name of company equity capital holding principal activities RM rm 2019 2018 % %

SHL Realty Sdn. Bhd. 3,000,000 100 100 Property investment

SHL Corporate Services 3,000,000 100 100 Providing strategic, Sdn. Bhd. financial and corporate planning services

Goodstock (Tawau) 2,000,002 100 100 Property development Sdn. Bhd.

Wilayah Builders Sdn. Bhd. 9,000,000 100 100 Property development

Ho Sin & Son Enterprise 1,000,000 100 100 Property development Sdn. Bhd.

Mayang Kiara Sdn. Bhd. 50,000 100 100 Property development

Sukma Pesona Sdn. Bhd. 500,000 100 100 Property development

Kajang Granite Quarry 5,000,000 100 100 Granite quarrying and Sdn. Bhd. manufacturing of aggregates

Senick Sdn. Bhd. 5 100 100 Granite quarrying and manufacturing of aggregates

Goodstock Land Sdn. Bhd. 1,500,000 60 60 Letting of properties

Subsidiaries of Sin Heap Lee Development Sdn. Bhd.

SHL-M Sdn. Bhd. 45,000,000 100 100 Property development

SHL-M Ventures Sdn. Bhd. 170,000,000 67 67 Property development

Subsidiary of SHL-M Sdn. Bhd.

* Sungai Long Golf Resort 5,000,000 100 100 Golf resort operator Berhad

Notes:

• Subsidiaries which are consolidated using merger method of accounting. * A wholly-owned subsidiary of SHL-M Sdn. Bhd.

10.1 Reversal of impairment loss on subsidiaries

During the financial year, the Company has conducted a review on its subsidiaries’ recoverable amounts.

As a result, a reversal of impairment loss totalling RM900,000/- (2018: RM1,383,000/-) is recognised in light of the improved performance of the subsidiaries under review. 110 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

10. investment in subsidiaries (continued)

10.2 Additional investment in an existing subsidiary

During the year, the Group purchased an additional investment in an indirect subsidiary, SHL-M Ventures Sdn. Bhd., a company incorporated in Malaysia, for a cash consideration of RM27,872,000/-.

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

10.3 Purchase of an indirect subsidiary

In previous financial year, the Group purchased a new indirect subsidiary, SHL-M Ventures Sdn. Bhd., a company incorporated in Malaysia, for a cash consideration of RM86,028,000/-.

The purchase had immaterial impact on the Group’s financial position, financial results and cash flows at the purchase date.

The effects of the purchase on the Group’s financial position at the end of the year were as follows:-

Group 2018 R M rm’000

Property, plant and equipment 142 Property development costs 114,480 Receivables 474 Current tax assets 22 Cash and deposits 25,847 Payables (12,400) Non-controlling interests (42,426)

Increase in Group’s net assets 86,139

The effects of the purchase on the Group’s financial results during the year were as follows:-

Group 2018 R M rm’000

Other operating income 1,163 Distribution costs (853) Administration expenses (85)

Profit before taxation 225 Taxation (60)

Profit for the year 165 Non-controlling interests (54)

Increase in Group’s profit 111

The fair values of the indirect subsidiary identifiable assets and liabilities approximated their carrying amounts. Accordingly, no fair value adjustments were made to account for the purchase. ANNUAL REPORT 2019 111 Notes to the Financial Statements 31 March 2019 (cont’d)

10. investment in subsidiaries (continued)

10.4 Non-controlling interests in subsidiaries

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:-

Goodstock SHL-M land ventures Sdn. Bhd. Sdn. Bhd. total 2019 rm’000 rm’000 rm’000

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

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

Net assets 42,932 191,197 234,129

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

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

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

2018 NCI percentage of ownership interest and voting interest 40% 33% Carrying amount of NCI 19,146 42,426 61,572 Profit allocated to NCI 536 54 590

Non-current assets 45,735 142 45,877 Current assets 5,817 140,823 146,640 Non-current liabilities (3,480) - (3,480) Current liabilities (208) (12,400) (12,608)

Net assets 47,864 128,565 176,429

Revenue 2,604 - 2,604 Profit for the year 1,340 165 1,505 Other comprehensive income for the year - - - Total comprehensive income for the year 1,340 165 1,505

Cash flows from operating activities 1,158 (53,394) (52,236) Cash flows from investing activities 127 (48,661) (48,534) Cash flows from financing activities - 127,902 127,902

Net increase/(decrease) in cash and cash equivalents 1,285 25,847 27,132

112 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

11. investment in associate

Group 2018 2019 RM’000 rm’000

Unquoted shares, at cost 1,305 1,305 Share of post-acquisition profits 9,231 8,909

10,536 10,214

Share of net assets 10,536 10,214

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

Details of associate are as follows:-

name of company Effective holding principal activities (Incorporated in Malaysia) 2019 2018 % %

Opt Ventures Sdn. Bhd. 30 30 Property development

Financial information of associate

The summarised financial information represents the amounts reported in the financial statements of associate:-

(i) Summarised statement of comprehensive income

OPT Ventures Sdn. Bhd. 2019 2018 R M rm’000 rm’000

Revenue 2,438 2,256 Profit for the year 1,075 3,841 Other comprehensive income, net of tax - - Total comprehensive income 1,075 3,841 Dividend paid - (21,250)

(ii) Summarised statement of financial position

OPT Ventures Sdn. Bhd. 2019 2018 R M rm’000 rm’000

Current assets 17,082 22,302 Non-current assets 21,764 22,672

38,846 44,974

Current liabilities (2,440) (9,643) Non-current liabilities (1,283) (1,283)

(3,723) (10,926)

Net assets 35,123 34,048

ANNUAL REPORT 2019 113 Notes to the Financial Statements 31 March 2019 (cont’d)

11. investment in associate (continued)

(iii) Reconciliation of the summarised financial information presented above to the carrying amounts of the Group’s interest in associate

OPT Ventures Sdn. Bhd. 2019 2018 R M rm’000 rm’000

Net assets at 1 April 34,048 51,457 Profit for the year 1,075 3,841 Other comprehensive income - - Dividend paid - (21,250)

Net assets at 31 March 35,123 34,048

Interest in associate as at year end 30% 30%

Carrying amount of Group’s interest in associate 10,536 10,214

12. investment properties

Group 2019 2018 R M rm’000 rm’000

At 1 April and 31 March 69,880 69,880

Fair value measurement

The fair values of investment properties are determined by the Directors (2018: Directors) based on the sales comparable approach that reflects the recent transaction prices for the similar properties which have been sold or are being offered for sale. The Directors are of the opinion that the said valuation remains to be appropriate for the current financial year as the Group revalues its investment properties whenever fair value of the said assets is expected to differ substantially from the carrying amounts.

The fair value measurement of investment properties are classified as level 3 in the fair value hierarchy.

Level 3 fair value of investment properties have been generally derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property type, size, location, tenure, title restrictions and other relevant characteristics.

Significant increase/(decrease) in estimated market value per square foot in isolation, would result in a significant higher/(lower) fair value of properties.

There have been no transfer between levels during the financial year in the fair value hierarchy.

In estimating the fair value of the properties, the highest and best use of the properties is different from their current use as these properties are held for long-term investment purposes.

114 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

13. investments

Unquoted club membership

Group 2019 2018 R M rm’000 rm’000

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

Change in classification of investments

In current financial year, the Group designated the unquoted investments at fair value through other comprehensive income because the Group intends to hold these investments for long-term strategic purpose. In the previous financial year, these investments were categorised as available-for-use.

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

14. inventories

31/3/2019 31/3/2018 1/4/2017 RM rm’000 rm’000 rm’000 Group R restated restated

Non-current: At cost: • Land held for property development (Note a) 2,749 2,745 2,740

Current: At cost: • Completed development units 6,522 6,522 9,006 • Building materials 296 113 957 • Raw materials 116 199 116 • Goods for resale 175 200 194 • Work in progress 11 226 106 • Finished goods 7,966 2,634 4,831

15,086 9,894 15,210 Property development costs (Note b) 254,083 227,841 191,961

269,169 237,735 207,171

Total inventories 271,918 240,480 209,911 ANNUAL REPORT 2019 115 Notes to the Financial Statements 31 March 2019 (cont’d)

14. inventories (continued)

(a) Land held for property development

land Development Group costs costs total 2019 rm’000 rm’000 rm’000

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

At 31 March 2019 2,383 366 2,749

2018 At cost: At 1 April 2017 2,380 360 2,740 Additions 2 3 5

At 31 March 2018 2,382 363 2,745

(b) Property development costs

land Development Group costs costs total 2019 rm’000 rm’000 rm’000

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

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

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

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

Carrying amount: At 31 March 2019 50,169 203,914 254,083 116 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

14. inventories (continued)

(b) Property development costs (continued)

land Development Group costs costs total 2018 rm’000 rm’000 rm’000

At cost: At 1 April 2017 96,558 657,558 754,116 Additions 2,015 103,191 105,206 Transfer from property, plant and equipment 15,085 - 15,085 Transfer to inventories (23) (423) (446) Derecognition on completion of project (38,358) (339,506) (377,864)

At 31 March 2018 75,277 420,820 496,097

Cost recognised in profit or loss: At 1 April 2017 53,334 508,821 562,155 Charge for the year 1,117 82,848 83,965 Derecognition on completion of project (38,358) (339,506) (377,864)

At 31 March 2018 16,093 252,163 268,256

Carrying amount: At 31 March 2018 59,184 168,657 227,841

Included in the property development costs are:

Group 31/3/2019 31/3/2018 1/4/2017 RM rm’000 rm’000 rm’000

Employee benefits expense capitalised: Directors’ emoluments: • salary, allowance and bonus 2,233 2,161 2,146 • defined contribution plans 144 148 146 • others 12 15 14

2,389 2,324 2,306 Other employees’ emoluments and benefits: • salary, allowance and bonus 938 984 1,054 • defined contribution plans 60 82 97 • others 64 68 63

1,062 1,134 1,214

3,451 3,458 3,520 ANNUAL REPORT 2019 117 Notes to the Financial Statements 31 March 2019 (cont’d)

15. Deferred tax assets and liabilities

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

Group 2019 2018 R M rm’000 rm’000

Deferred tax assets (5,311) (4,924) Deferred tax liabilities 32,086 21,235

26,775 16,311

The deferred tax assets and liabilities are offset as:-

• the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and

• they relate to taxes levied by the same authority on the Group.

Deferred tax assets of the Group are recognised when the realisation of the related tax benefits through the future taxable profits is probable based on recent history of results of the Group.

The movements and components of deferred tax assets and liabilities before appropriate offsetting are as follows:-

revaluation property, surplus on Unabsorbed property plant and land and capital reinvestment investment development Group equipment buildings allowances allowances properties costs total 2019 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

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

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

2018 At 1 April 2017 7,684 10,136 - (384) 3,771 (835) 20,372 Amount recognised in: • profit or loss (899) (25) (124) 384 - (3,222) (3,886) • other comprehensive income - (175) - - - - (175)

At 31 March 2018 6,785 9,936 (124) - 3,771 (4,057) 16,311 118 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

15. Deferred tax assets and liabilities (continued)

Unrecognised deductible temporary differences

The amounts of deductible temporary differences for which no deferred tax assets have been recognised in the statement of financial position are as follows:-

Group 2019 2018 R M rm’000 rm’000

Unabsorbed capital allowances 3,117 3,117 Unutilised tax losses 1,745 1,745 Receivables 2,632 343

7,494 5,205

The above deductible temporary differences have no expiry date except unutilised tax losses. Unutilised tax losses of RM1,745,000/- (2018: RM1,745,000/-) will expire in year 2025. No deferred tax assets have been recognised in respect of these deductible temporary differences because it is improbable that future profit will be available against which the Group can utilise the benefits therefrom.

16. trade receivables

Group 31/3/2019 31/3/2018 1/4/2017 RM rm’000 rm’000 rm’000

Non-current: Interest-bearing advances 20 547 2,322

Current: Interest-bearing advances 2,776 2,275 774 Others 20,682 25,936 78,775

23,458 28,211 79,549 Less: Allowance for impairment (2,853) (603) (97)

20,605 27,608 79,452

20,625 28,155 81,774 ANNUAL REPORT 2019 119 Notes to the Financial Statements 31 March 2019 (cont’d)

16. trade receivables (CONTINUED)

Trade receivables are non-interest-bearing and generally on 14 to 90-day (31.3.2018 and 1.4.2017: 14 to 90-day) terms. The contractual terms of interest-bearing advances are as follows:-

Unsecured interest-bearing advances 1

Group 31/3/2019 31/3/2018 1/4/2017

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

Interest rate 4.00% per annum 4.00% per annum 4.00% per annum

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

Unsecured interest-bearing advances 2

Group 31/3/2019 31/3/2018 1/4/2017

Principal amount RM75,000 RM75,000 RM75,000

Interest rate 4.00% per annum 4.00% per annum 4.00% per annum

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

Secured interest-bearing advances 3

Group 31/3/2019 31/3/2018 1/4/2017

Principal amount RM3,000,000 RM3,000,000 RM3,000,000

Interest rate 5.00% per annum 5.00% per annum 5.00% per annum

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

120 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

16. trade receivables (CONTINUED)

Group ** Payable on 31/3/2019 31/3/2018 1/4/2017 rm’000 RM’000 RM’000

14 August 2017 250 250 250 14 November 2017 250 250 250 14 February 2018 250 250 250 14 May 2018 250 250 250 14 August 2018 500 500 500 14 November 2018 500 500 500 14 February 2019 500 500 500 14 May 2019 500 500 500

Interest is charged and payable on monthly basis.

Interest-bearing advances 3 is secured by personal guarantee of the borrowers’ Director.

17. amounts due from/(to) subsidiaries

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

18. contract assets/(liabilities)

Group 31/3/2019 31/3/2018 1/4/2017 RM rm’000 rm’000 rm’000

Contract assets: Current: Contract assets from property development 95,010 - - Contract assets from construction works - - 260

95,010 - 260

Contract liabilities: Current: Contract liabilities from property development (35,874) (19,895) (59,000) Contract liabilities from sale of services (424) (436) (504)

(36,298) (20,331) (59,504)

The Group issues progress billings to purchasers when the billing milestones are attained. The Group recognises revenue where the performance obligation is satisfied. ANNUAL REPORT 2019 121 Notes to the Financial Statements 31 March 2019 (cont’d)

18. contract assets/(liabilities) (CONTINUED)

Contracts arising from property development

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

Group 31/3/2019 31/3/2018 1/4/2017 RM rm’000 rm’000 rm’000

Contract assets: At 1 April - - - Revenue recognised during the year 103,718 - - Progress billings issued during the year (7,727) - -

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

At 31 March 95,010 - -

Contract liabilities: At 1 April (19,895) (59,000) (58,659) Revenue recognised during the year 54,765 163,485 188,959 Progress billings issued during the year (70,744) (124,380) (189,300)

At 31 March (35,874) (19,895) (59,000)

Contracts arising from sale of services

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

Group 31/3/2019 31/3/2018 1/4/2017 RM rm’000 rm’000 rm’000

Contract liabilities: At 1 April (436) (504) (599) Revenue recognised during the year 474 513 623 Billings issued during the year (462) (445) (528)

At 31 March (424) (436) (504) 122 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

18. contract assets/(liabilities) (CONTINUED)

Contracts arising from construction works

The Group’s contract assets relating to the construction works as of each reporting period are summarised as follows:-

Group 31/3/2019 31/3/2018 1/4/2017 RM rm’000 rm’000 rm’000

Contract assets: Cost incurred - - 260 Attributable profits less losses - - -

- - 260 Progress billings - - -

- - 260

Contract assets represent unbilled amounts for incomplete works as at the reporting date. These amounts will be transferred to trade receivables when the works are completed and the right to bill becomes unconditional.

Unsatisfied performance obligations

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

Group 31/3/2019

property Sale of development services total RM rm’000 rm’000 rm’000

Within 1 year 9,174 109 9,283 Within 2 to 5 years - 315 315

9,174 424 9,598

The Group has applied expedient in paragraph C5 of MFRS 15 “Revenue from Contracts with Customers” whereby the transaction price allocated to unsatisfied or partially unsatisfied performance obligations as at 31 March 2018 and 1 April 2017 are not disclosed. ANNUAL REPORT 2019 123 Notes to the Financial Statements 31 March 2019 (cont’d)

19. other receivables Group Company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Advances 1,059 76 - - Deposits 4,603 5,252 5 - Other debtors 686 1,133 5 5

6,348 6,461 10 5 Prepayments 1,295 1,345 - -

7,643 7,806 10 5

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

20. cash, deposits and short-term investments

Group C company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Cash and bank balances: • housing development accounts 2,053 4,541 - - • others 7,057 13,001 64 121

9,110 17,542 64 121 Short-term deposits 149,097 192,781 4,123 1,438

158,207 210,323 4,187 1,559 Short-term investments 150,491 160,451 - -

308,698 370,774 4,187 1,559

Short-term investments are placements made in management funds that invest in Islamic deposits and other Shariah-compliant investment instruments permitted by the Shariah Advisory Council of the Securities Commission Malaysia and/or Shariah Adviser. Short-term fund aims to provide a higher level of liquidity while providing better return from non-taxable income by predominantly investing its assets in Sukuk and short-term Islamic Money Market Instruments. The income is calculated daily and distributed at month end.

Housing Development Accounts are held and maintained pursuant to Section 7A of the Housing Development Act, 1966. These accounts are restricted from use in other operations. 124 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

21. Share capital

Number of ordinary shares Amount 2019 2018 2019 2018 ‘000 ‘000 RM’000 RM’000

Issued and fully paid: At 1 April 242,124 242,124 247,726 242,124 Transfer in accordance with Section 618(2) of the Companies Act 2016 - - - 5,602

At 31 March 242,124 242,124 247,726 247,726

In previous financial year, the Company transferred the credit standing in the share premium and merger reserve accounts of RM1,225,000/- and RM4,377,000/- respectively to the share capital account pursuant to the transitional provision set out in Section 618(2) of the Act.

There is no impact on the numbers of ordinary shares in issue or the relative entitlement of any member of the Company as a result of this transitional provision.

22. reserves

Group Company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Non-distributable: Revaluation surplus 88,081 95,806 - - Capital reserves 6,663 6,663 23,361 23,361 Merger deficit (130,464) (130,464) - -

(35,720) (27,995) 23,361 23,361

Distributable: Retained profits 592,471 570,743 138,436 154,299

556,751 542,748 161,797 177,660

22.1 Revaluation surplus Revaluation surplus represents the surpluses arising from the revaluation of land and buildings of the subsidiaries net of related tax effects, if any.

22.2 Capital reserves Capital reserves of the Company represent gains arising from the disposal of investments in subsidiaries on Group restructuring.

Capital reserve of the Group represents share premium of the subsidiaries and reserve capitalised by a subsidiary for bonus issue of shares. ANNUAL REPORT 2019 125 Notes to the Financial Statements 31 March 2019 (cont’d)

22. reserves (CONTINUED)

22.3 Merger deficit Merger deficit represents the difference between the nominal value of shares issued bySHL Consolidated Bhd. to effect the merger and the nominal value of the shares acquired from the merged entities and is arrived at as follows:-

R M rm’000

Nominal value of 176,263,799 ordinary shares of RM1/- each issued by SHL Consolidated Bhd. 176,264 Nominal value of 45,800,000 ordinary shares of RM1/- each acquired (45,800)

Merger deficit 130,464

23. Finance lease liabilities

Group 2019 2018 R M rm’000 rm’000

Minimum lease payments: • 1 year or less 215 405 • 5 years or less but over 1 year 10 225

225 630 Future finance charge on finance leases (5) (27)

Present value of finance lease liabilities 220 603

Present value of finance lease liabilities: • 1 year or less 210 383 • 5 years or less but over 1 year 10 220

220 603

The repayment periods of the finance lease liabilities range from 3 to 5 years (2018: 3 to 5 years) at the inception of the leases. Interest is levied at rates ranging from 4.18% to 5.59% (2018: 4.18% to 6.83%) per annum. The finance lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

24. club establishment fund

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

25. trade payables

Trade payables are non-interest-bearing and are normally on 30 to 75-day (31/3/2018 and 1/4/2017: 30 to 75-day) terms. 126 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

26. other payables

Group Company 31/3/2019 31/3/2018 1/4/2017 31/3/2019 31/3/2018 1/4/2017 R rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

Accrued expenses 1,047 1,064 1,933 26 23 23 Refundable deposits 2,979 2,971 4,377 - - - Others 2,544 3,133 2,057 1 12 3

6,570 7,168 8,367 27 35 26

27. Dividends

Group Company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Paid by the Company: In respect of financial year ended 31 March 2017: • Second interim dividend of 6 Sen per share - 14,528 - 14,528 • Final dividend of 6 Sen per share - 14,527 - 14,527

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

38,740 29,055 38,740 29,055

Paid by partly-owned subsidiary: In respect of financial year ended 31 March 2019: • Interim dividend of 333 Sen per share 2,000 - - -

40,740 29,055 38,740 29,055

Declared: In respect of financial year ended 31 March 2018: • Interim dividend of 8 Sen per share - 19,370 - 19,370

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

ANNUAL REPORT 2019 127 Notes to the Financial Statements 31 March 2019 (cont’d)

27. Dividends (CONTINUED)

Group Company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Proposed: In respect of financial year ended 31 March 2018: • Final dividend of 8 Sen per share - 19,370 - 19,370

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

No recognition is made on the dividend proposed until it has been approved at the Annual General Meeting. The amount will be recognised as an appropriation of retained profits in the year in which it is approved.

28. capital management

The primary objective of the management of the Group and the Company’s capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility to pursue business opportunities and adequate access to liquidity to mitigate the effect of unforeseen events on cash flows.

The Directors regularly review the Group and the Company’s capital structure and make adjustments to reflect economic conditions, business strategies and future commitments.

The Group and the Company monitor capital using a gearing ratio, which is total debt divided by total capital.

The Group and the Company are in no breach of any gearing covenants during the financial years ended 31 March 2019 and 31 March 2018. In the same period, no significant changes were made in the objectives, policies and processes relating to the management of the Group and the Company’s capital structure.

Group Company 2019 2018 2019 2018 rm’000 rm’000 rm’000 rm’000

Finance lease liabilities 220 603 - -

Total debts 220 603 - -

Share capital 247,726 247,726 247,726 247,726 Reserves 556,751 542,748 161,798 177,660

Total capital 804,477 790,474 409,524 425,386

Gearing ratio (times) 0.0003 0.001 - -

128 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments

29.1 liquidity risk

Liquidity risk refers to the risk that the Group and the Company will encounter difficulty in meeting financial obligations when they fall due.

The table below summarises the maturity profile of the Group and the Company’s financial liabilities as at the reporting date based on contractual undiscounted repayment obligations:-

Within one to more than Group one year five years five years Total 31/3/2019 rm’000 rm’000 rm’000 rm’000

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

28,562 - 10,756 39,318

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

215 10 - 225

31/3/2018

Financial liabilities: Non-interest-bearing: • Trade payables 25,340 - - 25,340 • Other payables 7,168 - - 7,168 • Club establishment fund - - 10,988 10,988

32,508 - 10,988 43,496

Interest-bearing: • Finance lease liabilities: • principal 383 220 - 603 • interest 22 5 - 27

405 225 - 630

1/4/2017

Financial liabilities: Non-interest-bearing: • Trade payables 23,505 - - 23,505 • Other payables 8,367 - - 8,367 • Club establishment fund - - 11,022 11,022

31,872 - 11,022 42,894

Interest-bearing: • Finance lease liabilities: • principal 505 604 - 1,109 • interest 46 26 - 72

551 630 - 1,181

ANNUAL REPORT 2019 129 Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.1 liquidity risk (continued)

Within one to more than Company one year five years five years Total 31/3/2019 rm’000 rm’000 rm’000 rm’000

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

68,771 - - 68,771

31/3/2018

Financial liabilities: Non-interest-bearing: • Amount due to subsidiaries 70,744 - - 70,744 • Other payables 35 - - 35

70,779 - - 70,779

1/4/2017

Financial liabilities: Non-interest-bearing: • Amount due to subsidiaries 70,744 - - 70,744 • Other payables 26 - - 26

70,770 - - 70,770

130 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.2 interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market interest rates.

Sensitivity analysis for interest rate risk

No sensitivity analysis has been presented as the Group and the Company’s exposure to interest rate risk on the following interest-bearing instruments is insignificant:-

• Fixed rate instruments

These comprise interest-bearing trade receivables, short-term deposits, short-term investments and finance lease liabilities. The effective interest rates during the year are as follows:-

Group Company 2019 2018 2019 2018 % % % %

Trade receivables: • Interest-bearing advances 4.00 - 5.00 4.00 - 5.00 - - Short-term deposits 2.50 - 4.20 2.75 - 4.05 3.31 - 3.60 3.30 - 3.60 Short-term investments 2.56 - 3.90 3.52 - 3.63 - - Finance lease liabilities 4.18 - 5.59 4.18 - 6.83 - -

29.3 price risk

Price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or foreign currency).

The Group is exposed to price risk arising from its investment in short-term investments. These short-term investments are quoted in Malaysia and are classified as fair value through profit or loss financial assets.

Sensitivity analysis for price risk

The table below shows the analysis of the impact arising from reasonable possible changes in the prices of the fair value through profit or loss financial assets:-

Group 2019 2018 R M rm'000 rm'000

Increase/(decrease) in retained profits: Short-term investments: • Net assets value +/-1% 1,505 1,605

ANNUAL REPORT 2019 131 Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.4 credit risk

Credit risk is the potential loss from a transaction in the event of default by the counterparty.

At the reporting date, the Group and the Company’s maximum exposure to credit risk is represented by:-

▪ the carrying amount of each class of financial assets recognised in the statements of financial position; and

▪ utilised amounts of RM522,000/- (2018: RM811,000/-) relating to a corporate guarantee given by the Company to banks for credit facilities granted to subsidiaries, as disclosed in Note 31 to the financial statements.

Credit risk is controlled by the application of credit approvals, setting of counterparty limits and monitoring procedures. Credit risk is minimised given the Group and the Company’s policies of selecting only counterparties with high credit worthiness.

The Group has no significant concentrations of credit risk with any single counterparty.

(i) Trade receivables and contract assets

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

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

Ageing analysis of trade receivables

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

Group 31/3/2019 31/3/2018 1/4/2017 RM rm'000 rm'000 rm'000

Gross trade receivables 23,478 28,758 81,871 Contract assets 95,010 - 260

118,488 28,758 82,131

Trade receivables: • Neither past due nor impaired 20,210 27,728 70,167 • Past due unimpaired: • 1 to 30 days past due 78 91 7,793 • over 30 days past due 337 336 3,814 • Impaired 2,853 603 97

23,478 28,758 81,871

Contract assets: • Neither past due nor impaired 94,029 - 260 • Impaired 981 - -

95,010 - 260

118,488 28,758 82,131

132 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.4 credit risk (continued)

(i) Trade receivables and contract assets (continued)

Ageing analysis of trade receivables (continued)

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

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

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

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

Trade receivables that are past due unimpaired

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

Trade receivables and contract assets that are impaired

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

Group 31/3/2019 31/3/2018 1/4/2017 RM rm'000 rm'000 rm'000

Movements in allowance accounts: Trade receivables: At 1 April 603 97 136 Effect of adopting MFRS 9 2,250 - - Charge for the year 18 525 18 Derecognition (15) (18) (52) Reversal (3) (1) (5)

At 31 March 2,853 603 97

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

At 31 March 981 - -

3,834 603 97

ANNUAL REPORT 2019 133 Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.4 credit risk (continued)

(i) Trade receivables and contract assets (continued)

Ageing analysis of trade receivables (continued)

Trade receivables and contract assets that are impaired (continued)

(a) Trade receivables that are impaired individually

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that:

• are in significant financial difficulties and; • have defaulted on payments.

These receivables are unsecured by any collateral or credit enhancements.

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

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

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

(ii) Trust account and other receivables

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

(iii) Amounts due from subsidiaries

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

▪ in default when the subsidiaries are unable to pay on demand ▪ credit impaired when the subsidiaries are

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

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

134 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.4 credit risk (continued)

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

The counterparty risk ratings of the Group and of the Company’s cash and deposits with financial institutions at the reporting period end are as follows:-

Counterparty risk ratings AAA aaa AA A total Group rm'000 rm'000 rm'000 rm'000 2019

• Cash and deposits (excluding cash in hand) 29,615 112,934 15,569 158,118

2018

• Cash and deposits (excluding cash in hand) 41,422 120,698 48,117 210,237

Company 2019

• Cash and deposits (excluding cash in hand) 64 4,123 - 4,187

2018

• Cash and deposits (excluding cash in hand) 121 1,438 - 1,559

29.5 Fair values of financial instruments

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

As at the reporting date, the fair values of the Group and the Company’s financial instruments approximate their carrying amounts except as disclosed below:-

Non-current financial assets

Group 2019 2018 carrying Fair carrying Fair amount value amount value rm'000 rm'000 rm'000 rm'000

Trade receivables: • Non-current portion 20 19 547 505

ANNUAL REPORT 2019 135 Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.5 Fair values of financial instruments (continued)

Methods and assumptions used to estimate fair values

The following methods and assumptions are used to estimate the fair value of each class of financial instruments:

Financial instruments Fair values determination

• Investments The cost of unquoted investments has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.

• Short-term investments The fair values of the financial assets are determined by reference to statements of account at the reporting date provided by fund managers.

• Trade and other receivables The carrying amounts of these financial instruments (current) approximate fair values due to the relatively short-term • Cash and deposits maturity of these instruments. • Trade and other payables • Amounts due from/(to) subsidiaries

• Trade receivables (non-current) The fair value of the non-current trade receivables are estimated by discounting the future contractual cash flows at the current market rate.

The carrying amounts of the non-current trade receivables are reasonable approximation of fair value due to insignificant impact of discounting.

• Finance lease liabilities The carrying amounts of short-term finance lease liabilities approximate fair values because of the short period to maturity of these instruments.

The fair values of long-term finance lease liabilities are estimated based on the current rates available for finance lease liabilities with the same maturity profile. The carrying amount of the long-term finance lease liabilities are reasonable approximations of fair values due to the insignificant impact of discounting.

• Trust account The carrying amounts of these financial instruments • Club establishment fund approximate fair values, which represent the estimated amounts of the Group would receive or refund to members upon termination of investment contract. 136 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.6 Fair value hierarchy

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

level 1 level 2 level 3 total 2019 rm'000 rm'000 rm'000 rm'000

Investments - - 24 24

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

2018

Investments - - 24 24

Short-term investments - 160,451 - 160,451

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

29.7 Financial instruments by category

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

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

Financial Financial Financial Financial assets at liabilities at total assets at assets at amortised amortised carrying Group N note FVTPL FVOCI cost cost amount 31/3/2019 rm'000 rm'000 rm'000 rm'000 rm'000

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

150,491 24 187,372 - 337,887

Financial liabilities: • Finance lease liabilities 23 - - - 210 210 • Club establishment fund 24 - - - 10,756 10,756 • Trade payables 25 - - - 21,992 21,992 • Other payables 26 - - - 6,570 6,570

- - - 39,528 39,528

ANNUAL REPORT 2019 137 Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.7 Financial instruments by category (continued)

Financial Financial Financial Financial assets at liabilities at total assets at assets at amortised amortised carrying company N note FVTPL FVOCI cost cost amount 31/3/2019 rm'000 rm'000 rm'000 rm'000 rm'000

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

- - 53,992 - 53,992

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

- - - 68,771 68,771

The table below provides an analysis of financial instruments categorised under FRS 139 as follows:-

(a) At fair value through profit and loss (b) Available-for-sale (c) Loans and receivables (d) Financial liabilities at amortised cost

at fair value Financial through liabilities at total profit Available- Loans and amortised carrying Group N note or loss for-sale receivables cost amount 31/3/2018 rm’000 rm’000 rm’000 rm’000 rm’000

Financial assets: • Investments 13 - 24 - - 24 • Trust account - - 2,397 - 2,397 • Trade receivables 16 - - 28,155 - 28,155 • Other receivables (excluding prepayments) 19 - - 6,461 - 6,461 • Cash, deposits and short-term investments 20 160,451 - 210,323 - 370,774

160,451 24 247,336 - 407,811

Financial liabilities: • Finance lease liabilities 23 - - - 603 603 • Club establishment fund 24 - - - 10,988 10,988 • Trade payables 25 - - - 25,340 25,340 • Other payables 26 - - - 7,168 7,168

- - - 44,099 44,099 138 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.7 Financial instruments by category (continued)

at fair value Financial through liabilities at total profit Available- Loans and amortised carrying Group N note or loss for-sale receivables cost amount 1/4/2017 rm’000 rm’000 rm’000 rm’000 rm’000

Financial assets: • Investments 13 - 24 - - 24 • Trust account - - 2,399 - 2,399 • Trade receivables 16 - - 81,774 - 81,774 • Other receivables (excluding prepayments) 19 - - 7,002 - 7,002 • Cash, deposits and short-term investments 20 149,995 - 140,425 - 290,420

149,995 24 231,600 - 381,619

Financial liabilities: • Finance lease liabilities 23 - - - 1,109 1,109 • Club establishment fund 24 - - - 11,022 11,022 • Trade payables 25 - - - 23,505 23,505 • Other payables 26 - - - 8,367 8,367

- - - 44,003 44,003

Financial total loans and liabilities at carrying company Note receivables amortised cost amount 31/3/2018 RM'000 rm'000 rm'000

Financial assets: • Amounts due from subsidiaries 17 71,195 - 71,195 • Other receivables 19 5 - 5 • Cash, deposits and short-term investments 20 1,559 - 1,559

72,759 - 72,759

Financial liabilities: • Amounts due to subsidiaries 17 - 70,744 70,744 • Other payables 26 - 35 35

- 70,779 70,779 ANNUAL REPORT 2019 139 Notes to the Financial Statements 31 March 2019 (cont’d)

29. Financial instruments (CONTINUED)

29.7 Financial instruments by category (continued)

Financial total loans and liabilities at carrying company Note receivables amortised cost amount 1/4/2017 R rm'000 rm'000 rm'000

Financial assets: • Amounts due from subsidiaries 17 82,211 - 82,211 • Cash, deposits and short-term investments 20 640 - 640

82,851 - 82,851

Financial liabilities: • Amounts due to subsidiaries 17 - 70,744 70,744 • Other payables 26 - 26 26

- 70,770 70,770

30. commitments

Non-cancellable operating lease commitment:

Group Group as lessor 2019 2018 R M rm'000 rm'000

Future minimum rental receivable: • 1 year or less 1,905 1,834 • 5 years or less but over 1 year 1,113 2,012

3,018 3,846

Group entered into commercial property leases on its portfolio of investment properties consisting of commercial buildings. These leases have non-cancellable lease terms of 3 years (2018: 3 years).

31. contingent liabilities

company 2019 2018 R M rm'000 rm'000

Unsecured: Corporate guarantees given to bankers for banking facilities granted to subsidiaries 522 811 140 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

32. Segment reporting

Management has determined the operating segments based on reports reviewed by the Board of Directors and the working group that makes strategic decisions.

Segment information is presented in respect of Group’s business. No segment reporting by geographical segments has been provided as the Group is primarily involved in business operations in Malaysia. Inter-segment pricing is determined according to the normal course of business and has been established under the terms that are no less favourable than those arranged with external customers. Segment revenue, results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Investment and property Group services development construction trading manufacturing Quarrying elimination consolidated 2019 RM’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

Revenue External sales 11,959 158,913 - - 326 44 - 171,242 Inter-segment revenue 2,587 2,067 91,345 23,882 5,410 - (125,291) -

14,546 160,980 91,345 23,882 5,736 44 (125,291) 171,242

Results Operating profit 3,063 63,044 5,714 12 260 5,031 (6,685) 70,439 Interest income 1,068 5,794 1,185 367 1,486 1,072 - 10,972 Finance costs (15) (6) - - - - - (21) Profit from associate - 322 - - - - - 322

Profit before taxation 4,116 69,154 6,899 379 1,746 6,103 (6,685) 81,712 Taxation (12,308) Non-controlling interests (6,968)

Profit for the year 62,436

Assets Segment assets 242,453 675,375 111,363 16,903 82,589 36,915 (188,453) 977,145 Investment in associate - 10,536 - - - - - 10,536 Current and deferred tax assets 71 5,737 - - - - - 5,808

Total assets 242,524 691,648 111,363 16,903 82,589 36,915 (188,453) 993,489

Liabilities Segment liabilities 13,834 78,861 46,440 3,462 620 508 (67,889) 75,836 Current and deferred tax liabilities 6,738 21,017 196 186 4,749 22 - 32,908

Total liabilities 20,572 99,878 46,636 3,648 5,369 530 (67,889) 108,744

Others Capital expenditure 1,235 384 129 - - - - 1,748

Non-cash expenses: • depreciation 1,152 368 119 - 1,245 - - 2,884

ANNUAL REPORT 2019 141 Notes to the Financial Statements 31 March 2019 (cont’d)

32. Segment reporting (continued)

Investment and property Group services development construction trading manufacturing Quarrying elimination consolidated 2018 RM’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

Revenue External sales 11,926 167,702 - - 322 592 - 180,542 Inter-segment revenue 6,248 - 82,951 40,974 8,048 - (138,221) -

18,174 167,702 82,951 40,974 8,370 592 (138,221) 180,542

Results Operating profit 23,694 61,601 3,325 14 (920) 8,235 (27,399) 68,550 Interest income 908 7,247 1,676 402 1,352 1,118 - 12,703 Finance costs (34) (15) - - - - - (49) Profit from associate - 1,152 - - - - - 1,152

Profit before taxation 24,568 69,985 5,001 416 432 9,353 (27,399) 82,356 Taxation (12,642) Non-controlling interests (590)

Profit for the year 69,124

Assets Segment assets 243,918 602,645 97,783 23,924 81,877 55,417 (179,898) 925,666 Investment in associate - 10,214 - - - - - 10,214 Current and deferred tax assets 276 4,946 131 - 48 - - 5,401

Total assets 244,194 617,805 97,914 23,924 81,925 55,417 (179,898) 941,281

Liabilities Segment liabilities 14,216 46,009 41,610 10,768 1,231 509 (49,913) 64,430 Current and deferred tax liabilities 4,710 11,907 - 99 8,050 39 - 24,805

Total liabilities 18,926 57,916 41,610 10,867 9,281 548 (49,913) 89,235

Others Capital expenditure 2,004 1,802 138 - 274 7,751 - 11,969

Non-cash expenses: • depreciation 1,295 467 93 - 4,040 - - 5,895 142 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

33. related party disclosures

33.1 Related party transactions

transactions with subsidiaries:

Group Company 2019 2018 2019 2018 rm'000 rm'000 rm'000 rm'000

Dividend income: Kajang Granite Quarry Sdn. Bhd. - - 19,400 19,400 Goodstock Land Sdn. Bhd. - - 3,000 -

- - 22,400 19,400

Unsecured corporate guarantees: Maximum principal amount of corporate guarantees given to bankers for banking facilities granted to: ▪ Sin Heap Lee Company Sdn. Berhad - - 8,900 8,900 ▪ Sin Heap Lee Brickworks Sdn. Bhd. - - 1,000 1,000 ▪ Sin Heap Lee Construction Sdn. Bhd. - - 57,000 57,000 ▪ Sin Heap Lee Development Sdn. Bhd. - - 6,000 6,000

- - 72,900 72,900

Transactions with entities over which certain Directors have substantial financial interests:

Group Company 2019 2018 2019 2018 rm'000 rm'000 rm'000 rm'000

Income: Property development: ▪ Sin Heap Lee Capital Sdn. Bhd. 1,614 - - -

Sale of land: ▪ Sin Heap Lee Land Sdn. Bhd. 430 - - -

Secondment fee: ▪ Project Delivery Partner Sdn. Bhd. 913 - - -

Expenses: Engineering consultancy services: ▪ SSP Housing Sdn. Bhd. 2,017 6,723 - - ▪ Sepakat Setia Perunding (Sendirian) Bhd. 79 252 - - ▪ Project Delivery Partner Sdn. Bhd. 3,962 1,981 - -

Engineering consultancy services capitalised in property development costs: ▪ SSP Housing Sdn. Bhd. 683 - - - ANNUAL REPORT 2019 143 Notes to the Financial Statements 31 March 2019 (cont’d)

33. related party disclosures (CONTINUED)

33.2 Related party balances

Group Company 2019 2018 2019 2018 rm'000 rm'000 rm'000 rm'000

Amounts due from subsidiaries: Sin Heap Lee Development Sdn. Bhd. - - 49,795 51,795 Kajang Granite Quarry Sdn. Bhd. - - - 19,400

- - 49,795 71,195

Contract assets: Sin Heap Lee Capital Sdn. Bhd. 1,493 - - -

Amount due to subsidiaries: Sin Heap Lee Construction Sdn. Bhd. - - 68,744 70,744

Trade payables: Entities over which certain Directors have substantial financial interests: ▪ Project Delivery Partner Sdn. Bhd. 3,155 - - - ▪ SSP Housing Sdn. Bhd. 596 - - -

3,751 - - -

33.3 Directors’ remunerations

The aggregate amounts of remunerations received by the Directors of the Company during the financial year were as follows:-

Group Company 2019 2018 2019 2018 rm'000 rm'000 rm'000 rm'000

Non-executive Directors 190 145 190 145 Executive Directors 76 60 76 60

Total Directors' fees 266 205 266 205

Non-executive Directors 747 718 36 24 Executive Directors 1,678 1,630 - -

Total Directors' other emoluments 2,425 2,348 36 24

total Directors' remunerations 2,691 2,553 302 229

Analysed as amounts: ▪ capitalised in property development costs (Note 14) 2,389 2,324 - - ▪ recognised directly in profit or loss 302 229 302 229

2,691 2,553 302 229

144 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

34. explanation of transition to MFRSs and adoption of MFRS Standards

34.1 transition from FRSs to MFRSs

(i) MFRS 1 “First-time adoption of Malaysian Financial Reporting Standards”

As provided in MFRS 1, the Group and the Company as the first-time adopter of MFRSs have elected to apply the following exemptions on other MFRSs from a full retrospective application as explained below:-

Items Descriptions

• Business MFRS 1 provides the option to apply MFRS 3 “Business combinations Combinations” prospectively for business combinations that occurred from the transition date of MFRS or from designated dates prior to the transition date.

The Group has elected not to restate business combinations that took place prior to the transition date, i.e. 1 April 2017.

• Exemption from The Group and the Company have elected the exemption in the requirement to MFRS 1 which allows the Group and the Company not to restate restate comparative comparative information in the year of initial application. The information for Group and the Company continue to apply the following MFRS 9 standards for the comparative information: • FRS 139 Financial Instruments: Recognition and Measurement • FRS 7 Financial Instruments: Disclosures

Any adjustments to align the carrying amounts of financial assets and financial liabilities under the previous FRS 139 with MFRS 9 are recognised in equity as at 1 April 2018.

• MFRS 15 Revenue The Group and the Company have elected the exemption in from Contracts MFRS 1 which allows the Group and the Company not to restate with Customers any contracts that are completed as at the transition date, i.e. 1 April 2017.

The transition to MFRSs has no material financial impact on the Group and the Company’s financial statements.

34.2 effects of adopting MFRS Standards

(i) Effect of adopting MFRS 9 “Financial Instruments”

The Group and the Company adopted MFRS 9 “Financial Instruments” with a date of initial application of 1 April 2018. As a result, the Group and the Company have changed their accounting policies for financial instruments as detailed below.

The Group and the Company have elected not to restate the comparative information in the year of initial application of MFRS 9 relating to the transition for classification, measurement and impairment and, accordingly, have not restated comparative information in the year of initial application. ANNUAL REPORT 2019 145 Notes to the Financial Statements 31 March 2019 (cont’d)

34. explanation of transition to MFRSs and adoption of MFRS Standards (continued)

34.2 effects of adopting MFRS Standards (continued)

(i) Effect of adopting MFRS 9 “Financial Instruments” (continued)

(a) Classification and measurement

Under MFRS 9, financial assets are classified according to their cash flow characteristics and the business model in which they are managed. The Group and the Company have categorised their financial assets as follows:-

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

The following table summarises the reclassification of the Group and the Company’s financial assets as at 1 April 2018:-

Financial assets Measurement category P previous new Group note (FRS 139) (MFRS 9)

Investments # 13 Available- FVOCI for-sale

Trust account Loans and Amortised receivables cost

Trade receivables 16 Loans and Amortised receivables cost

Other receivables (excluding 19 Loans and Amortised prepayments) receivables cost

Cash and deposits 20 Loans and Amortised receivables cost

Short-term investments 20 FVTPL FVTPL

Amounts due from subsidiaries 17 Loans and Amortised receivables cost

Other receivables (excluding 19 Loans and Amortised prepayments) receivables cost

Cash and deposits 20 Loans and Amortised receivables cost

# As at 1 April 2018, the Group elected to present in other comprehensive income the changes in fair value of its unquoted investments in Malaysia previously classified as available-for-sale (“AFS”), as these investments are not heldfor trading.

Classification of the Group and the Company’s financial liabilities remained unchanged. Financial liabilities consisting of club establishment fund, trade payables, other payables, finance lease liabilities and amounts due to subsidiaries continue to be measured at amortised cost. 146 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

34. explanation of transition to MFRSs and adoption of MFRS Standards (continued)

34.2 effects of adopting MFRS Standards (continued)

(i) Effect of adopting MFRS 9 “Financial Instruments” (continued)

(b) Impairment

MFRS 9 changes the recognition of impairment provision for financial assets and contract assets by introducing an expected credit loss model. Upon the adoption of MFRS 9, the Group and the Company assess, on a forward-looking basis, the expected credit losses associated with their contract assets and financial assets carried at amortised cost. The impairment methodology applied depends on whether:-

• the asset originated from a contract that is in the scope of MFRS 15; or • there has been a significant increase in credit risk

The Group and the Company revise the impairment methodology under MFRS 9 for each of the following classes of assets:-

• Trust account, trade receivables, other receivables, contract assets and amounts due from subsidiaries

For these assets, the Group and the Company apply the simplified approach to provide for expected credit losses prescribed by MFRS 9, which requires the use of the lifetime expected loss provision. The Group and the Company have established a provision based on the Group and the Company’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

• Cash and deposits

For these financial assets, the Group and the Company apply the general approach to provide for expected credit losses. These instruments are assessed to be of low credit risk, and therefore, the impairment provision is determined using a 12-month expected credit loss basis.

The following table summarises the remeasurement of the Group and of the Company’s financial assets as at 1 April 2018:-

Financial assets Carrying amount previous new Group Note (FRS 139) (MFRS 9) at 31/3/2018 remeasurement at 1/4/2018 rm’000 rm’000 rm’000

Investments 13 24 - 24

Trust account 2,397 - 2,397

Trade receivables 16 28,155 - 28,155 Increase in allowance for impairment - (2,250) (2,250)

Trade receivables 28,155 (2,250) 25,905

Other receivables (excluding prepayments 19 6,461 - 6,461

ANNUAL REPORT 2019 147 Notes to the Financial Statements 31 March 2019 (cont’d)

34. explanation of transition to MFRSs and adoption of MFRS Standards (continued)

34.2 effects of adopting MFRS Standards (continued)

(i) Effect of adopting MFRS 9 “Financial Instruments” (continued)

(b) Impairment (continued)

Financial assets Carrying amount previous new Group Note (FRS 139) (MFRS 9) at 31/3/2018 remeasurement at 1/4/2018 rm’000 rm’000 rm’000

Cash and deposits 20 210,323 - 210,323

Short-term investments 20 160,451 - 160,451

Amounts due from subsidiaries 17 71,195 - 71,195

Other receivables (excluding prepayments 19 5 - 5

Cash and deposits 20 1,559 - 1,559

The adoption of this standard resulted in:-

• Changes in accounting policies as disclosed in Notes 4.10 and 4.18 to the financial statements.

• Additional disclosure requirements as disclosed in Notes 13 and 29 to the financial statements.

(ii) Effect of adopting MFRS 15 “Revenue from Contracts with Customers”

The Group and the Company have adopted MFRS 15 “Revenue from Contracts with Customers” with a date of initial application of 1 April 2018. As a result, the Group and the Company have changed their accounting policies for revenue recognition as detailed below.

Prior to the adoption of MFRS 15, revenue from the sale of goods and performance of services are recognised at the fair value of the consideration received or receivable upon delivery of goods or performance of services, net of discounts, allowances and indirect taxes.

With the adoption of MFRS 15, revenue is recognised by reference to each distinct performance obligation in the contract with customers. Transaction price is allocated to each performance obligation on the basis of the relative stand-alone selling prices of each distinct goods or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time. 148 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

34. explanation of transition to MFRSs and adoption of MFRS Standards (continued)

34.2 effects of adopting MFRS Standards (continued)

(ii) Effect of adopting MFRS 15 “Revenue from Contracts with Customers” (continued)

The Group and the Company apply MFRS 15 using the modified retrospective approach with the election of the following practical expedients:-

(i) for completed contracts, contracts that begin and end within the same annual reporting period were not restated; and

(ii) for all reporting periods presented before the date of initial application, the amount of the transaction price allocated to the remaining performance obligation and an explanation of when the entity expects to recognise that amount as revenue is not disclosed.

The adoption of this standard has no material financial impact on the Group’s and the Company’s financial statements other than the following:-

• Changes in accounting policies for revenue recognition as disclosed in Note 4.4 to the financial statements.

• Additional disclosure requirements as disclosed in Notes 5 and 18 to the financial statements.

• Reclassification of land held for property development and property development costs to inventories.

• Reclassification of amount due from customer and progress billings to contract assets and contract liabilities respectively.

• Reclassification of advanced subscription fees to contract liabilities.

The effect on adoption of this standard is disclosed in Note 34.4 to the financial statements.

34.3 Reclassifications

Certain significant items of comparative information have been restated arising from a review of disclosure requirements.

The items of comparative information restated are disclosed in Note 34.4 to the financial statements. ANNUAL REPORT 2019 149 Notes to the Financial Statements 31 March 2019 (cont’d)

34. explanation of transition to MFRSs and adoption of MFRS Standards (continued)

34.4 Financial impact on adoption of MFRS Standards

(a) Reconciliation of the Group’s statement of financial position

31 March 2018 1 April 2017 effect of effect of adopting reclassi- adopting reclassi- Group FRSs MFRS 15 fication MFRSs FRSs MFRS 15 fication MFRSs RM’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000 rm’000

ASSETS Non-current assets Property, plant and equipment 205,465 - 685 206,150 214,471 - 695 215,166 Prepaid lease payments 675 - (675) - 685 - (685) - Investment in associate 10,214 - - 10,214 15,437 - - 15,437 Investment properties 69,880 - - 69,880 69,880 - - 69,880 Investments 24 - - 24 24 - - 24 Land held for property development 2,745 (2,745) - - 2,740 (2,740) - - Inventories - 2,745 - 2,745 - 2,740 - 2,740 Trust account 2,397 - - 2,397 2,399 - - 2,399 Deferred tax assets 4,924 - - 4,924 1,611 - - 1,611 Trade receivables 547 - - 547 2,322 - - 2,322

296,871 - 10 296,881 309,569 - 10 309,579

Current assets Prepaid lease payments 10 - (10) - 10 - (10) - Property development costs 227,841 (227,841) - - 191,961 (191,961) - - Inventories 9,894 227,841 - 237,735 15,210 191,961 - 207,171 Trade receivables 27,608 - - 27,608 79,712 (260) - 79,452 Contract assets - - - - - 260 - 260 Other receivables 7,806 - - 7,806 8,184 - - 8,184 Current tax assets 477 - - 477 2,057 - - 2,057 Cash, deposits and short- term investments 370,774 - - 370,774 290,420 - - 290,420

644,410 - (10) 644,400 587,554 - (10) 587,544

TOTAL ASSETS 941,281 - - 941,281 897,123 - - 897,123 150 SHL CONSOLIDATED BHD Notes to the Financial Statements 31 March 2019 (cont’d)

34. explanation of transition to MFRSs and adoption of MFRS Standards (continued)

34.4 Financial impact on adoption of MFRS Standards (continued)

(a) Reconciliation of the Group’s statement of financial position (continued)

EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 247,726 - - 247,726 242,124 - - 242,124 Reserves 542,748 - - 542,748 508,106 - - 508,106

790,474 - - 790,474 750,230 - - 750,230 Non-controlling interests 61,572 - - 61,572 18,610 - - 18,610

TOTAL EQUITY 852,046 - - 852,046 768,840 - - 768,840

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

32,443 - - 32,443 33,609 - - 33,609

Current liabilities Trade payables 45,235 (19,895) - 25,340 82,505 (59,000) - 23,505 Contract liabilities - 20,331 - 20,331 - 59,504 - 59,504 Other payables 7,604 (436) - 7,168 8,871 (504) - 8,367 Current tax liabilities 3,570 - - 3,570 2,793 - - 2,793 Finance lease liabilities 383 - - 383 505 - - 505

56,792 - - 56,792 94,674 - - 94,674

TOTAL LIABILITIES 89,235 - - 89,235 128,283 - - 128,283

TOTAL EQUITY AND LIABILITIES 941,281 - - 941,281 897,123 - - 897,123

(b) Reconciliation of the Company’s statement of financial position

No reconciliation of financial position is presented as the adoption of MFRS Standards has no impact on the Company’s financial position.

(c) Reconciliation of the statements of changes in equity, statements of comprehensive income and statements of cash flows

No reconciliation of equity, profits and cash flows is presented as the adoption of MFRS Standards has no impact on the Group and the Company’s equity, profits and cash flows. ANNUAL REPORT 2019 151 LIST OF PROPERTIES As at 31 March 2019

Date of Description Tenure/Age Net Book Acquisition/ &/or of Building Land Area Value Date of Location Usage (Years) (Acres) RM’000 Revaluation

Selangor Darul Ehsan

Lot 27871 Golf Course, Club Freehold 149.54 145,212 31-3-2015 Mukim of Cheras Houses and Driving 2 & 26 District of Hulu Langat Range

P.T. 21147 Medical Centre Freehold 9 0.52 22,000 31-3-2015 Mukim of Cheras District of Hulu Langat

P.T. 21062 Food Court Freehold 9 0.46 2,180 31-3-2015 Mukim of Cheras District of Hulu Langat

2½ Miles, Sungai Pelek Land and factory Freehold 10.09 13,478 31-3-2015 43900 Sepang building 22 & 29

Lot 1731, 1737, P.T. 9519 & Agriculture land Freehold 14.15 2,217 31-3-2015 63/2 Mukim and District of Sepang

P.T. 721 Agriculture land 99 years 1.27 156 31-3-2015 Mukim and District of lease expiring Sepang in 2083

Lot 1465, 1467, 1468 & Clay reserve land 99 years 6.07 519 31-3-2015 1471, P.T. 720 lease expiring Mukim and District of in 2084/ Sepang 2087

Lot 64, 207, 208, 730 Clay reserve land Freehold 16.75 2,941 31-3-2015 Mukim and District of Sepang

Lot 1117 Agriculture land Freehold 3.54 931 23-6-2009 Mukim of Semenyih District of Hulu Langat

Lot 173 Agriculture land Freehold 4.81 7,751 20-10-2017 Mukim Semenyih, Batu 17, Jalan Semenyih, District of Hulu Langat

Lot 2116 & 3489 Land held for Freehold 5.18 174 24-9-1992 Mukim of Cheras future housing 7-5-1990 District of Hulu Langat development

P.T. 21023, 21226, 21911, Land held Freehold 7.48 8,000 31-3-2000 39753 & 39754 for future 19-12-1989 Mukim of Cheras development 31-3-2015 District of Hulu Langat 152 SHL CONSOLIDATED BHD LIST OF PROPERTIES As at 31 March 2019 (cont’d )

Date of Description Tenure/Age Net Book Acquisition/ &/or of Building Land Area Value Date of Location Usage (Years) (Acres) RM’000 Revaluation

Selangor Darul Ehsan (cont’d)

Lot 4137 Land held 99 years 0.37 1 15-1-1991 Mukim of Cheras for future lease expiring District of Hulu Langat development in 2067

Lot 30571 & 30572 Land held for Freehold 3.00 2,699 31-3-2015 Mukim of Cheras future housing District of Hulu Langat development

P.T. 816 - 1186 Ongoing 99 years 87.90 11,565 10-2-1999 Mukim of Batang Kali development of lease expiring District of Hulu Selangor housing scheme in 2089

Lot 3954 & 3955 Land held 99 years 0.37 486 4-8-2016 Mukim Batang Kali for future lease expiring District of Hulu Selangor development in 2088

P.T. 405, 412, 413, 1586, Land held for Freehold 10.69 1 4-4-1979 2053, 2302, 2305, 2349- future housing 18-12-1986 2357, 2403 & 2404 development 31-3-1987 Mukim of Rawang District of Gombak

Lot 32715-32716, 33996- Land held for Freehold 1.99 88 31-3-1994 33997, P.T. 34019-34040 future housing Mukim and District of development Petaling

P.T. 6595, 6596 & 6933 Ongoing 99 years 4.87 5,470 19-2-2003 Mukim Bukit Rajah development of lease expiring District of Petaling shop office in 2102

Lot 7989 & 7990, PT 10503, Ongoing Freehold 105.08 96,703 1-12-1997 Lot 1340 development of 9-8-1997 Mukim of Semenyih housing scheme 31-3-2000 District of Hulu Langat

P.T. 58715-58738 & Ongoing 99 years 9.62 16,361 7-5-1998 59170-59187 development of lease expiring Mukim of Cheras housing scheme in 2092 District of Hulu Langat

Lot 58761-58790 Ongoing Freehold 4.52 19,283 19-12-1989 Mukim of Cheras development of District of Hulu Langat housing scheme

Lot 27762 Ongoing Freehold 6.38 104,320 31-3-2015 Mukim of Cheras development of District of Hulu Langat housing scheme ANNUAL REPORT 2019 153 LIST OF PROPERTIES As at 31 March 2019 (cont’d)

Date of Description Tenure/Age Net Book Acquisition/ &/or of Building Land Area Value Date of Location Usage (Years) (Acres) RM’000 Revaluation

Wilayah Persekutuan

Lot 251, Section 43 Commercial Freehold 0.23 45,700 31-3-2015 Wilayah Persekutuan building 25 Kuala Lumpur

Negeri Sembilan

Lot 493, 497, 499, 502, 503, Agriculture land Freehold 101.49 2,485 31-3-2000 504, 505, 506, 507, 510, 580, held for future 697, 698 & 699 development Mukim of Parit Tinggi District of Kuala Pilah 154 SHL CONSOLIDATED BHD ANALYSIS OF SHAREHOLDINGS As at 30 June 2019

SHARE capital

Issued and Fully Paid-up Capital - RM242,123,725.00 Class of Shares - Ordinary Shares of RM1.00 Each Voting Right - One Vote Per Ordinary Share No. of Shareholders - 3,413

DISTRIBUTION OF SHAREHOLDINGS

no. of no. of Size of Shareholdings Shareholders % Shares %

Less than 100 380 11.13 14,508 0.01 100 - 1,000 488 14.30 333,061 0.14 1,001 - 10,000 2,123 62.20 6,797,903 2.81 10,001 - 100,000 354 10.37 9,963,413 4.12 100,001 and below 5% 64 1.88 60,932,557 41.57 5% and above 4 0.12 164,082,283 67.77

TOTAL 3,413 100.00 242,123,725 100.00

SUBSTANTIAL SHAREHOLDERS

Name of NRIC No./ Direct Holdings indirect Holdings Substantial Shareholders Registration No. no. of Shares % no. of Shares %

1 Y.A.M. Tengku Abdul Samad Shah 530927-10-5667 - - 21,222,437 8.77 Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 2 Dato’ Sri Yap Teiong Choon 530218-10-5955 4,283,869 1.77 0,659,844 25.05 3 Dato’ Sri Ir. Yap Chong Lee 540921-10-5761 1,835,519 0.76 93,355,143 38.56 4 Yap Teiong Choon Holdings Sdn Bhd 67870-U 3,411,944 1.41 54,247,900 22.41 5 Sin Heap Lee Holdings Sdn Bhd 67869-D 51,519,703 21.28 - - 6 Sin Heap Lee Capital Sdn Bhd 73421-H 91,340,143 37.72 - - 7 Taipan Equity Sdn Bhd 292562-W 21,222,437 8.77 - -

DIRECTORS’ SHAREHOLDINGS

Direct Holdings indirect Holdings Name of Directors NRIC No. no. of Shares % no. of Shares %

1 Y.A.M. Tengku Abdul Samad Shah 530927-10-5667 - - 21,222,437 8.77 Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah 2 Dato’ Sri Yap Teiong Choon 530218-10-5955 4,283,869 1.77 60,659,844 25.05 3 Dato’ Sri Ir. Yap Chong Lee 540921-10-5761 1,835,519 0.76 92,105,143 38.04 4 Wong Tiek Fong 620620-06-5161 80,000 0.03 - - 5 Au Lai Koong 650726-10-5149 5,000 0.00 - - 6 Souren Norendra 701228-10-5119 - - - - 7 Ng Chin Hoo 590514-08-5391 - - - - ANNUAL REPORT 2019 155 ANALYSIS OF SHAREHOLDINGS As at 30 June 2019 (cont’d)

LIST OF THE THIRTY (30) LARGEST SHAREHOLDERS AS AT 30 JUNE 2019

NRIC No./ Names Registration No. no. of Shares %

1 SIN HEAP LEE CAPITAL SDN BHD 73421-H 91,340,143 37.72 2 SIN HEAP LEE HOLDINGS SDN BHD 67869-D 37,019,703 15.29 3 TAIPAN EQUITY SDN BHD 102918-T 21,222,437 8.77 4 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 6193K 14,500,000 5.99 Pledged Securities Account for Sin Heap Lee Holdings Sdn Bhd 5 HSBC NOMINEES (ASING) SDN BHD 4381-U 11,947,000 4.93 Exempt AN for JPMorgan Chase Bank, National Association (SINGAPOREJPMPB) 6 SSP PROFESSIONAL SERVICES SDN BHD 93332-T 9,071,400 3.75 7 KMB-WAJAR SERI SDN BHD 621146-W 5,041,600 2.08 8 YAP TEIONG CHOON HOLDINGS SDN BHD 67870-U 3,411,944 1.41 9 YTC GLOBAL SDN BHD 49941-A 2,728,197 1.13 10 YAP TEONG SUAN 440427-10-5493 2,303,142 0.95 11 DATO’ SRI YAP TEIONG CHOON 530218-10-5955 2,223,650 0.92 12 DATO’ SRI YAP TEIONG CHOON 530218-10-5955 2,060,219 0.85 13 DATIN SRI PHAN FOO BEAM 530301-08-6986 2,000,000 0.83 14 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 284597-P 1,906,750 0.79 Pledged Securities Account for Ng Peck Chin 15 LIM KHUAN ENG 420329-08-5697 1,370,000 0.57 16 GOH THONG BENG 401020-07-5219 1,330,000 0.55 17 ENVIMATIC SDN BHD 251931-X 1,128,686 0.47 18 DATO’ SRI IR. YAP CHONG LEE 540921-10-5761 1,063,019 0.44 19 DATIN SRI TAN MOH POH 560613-07-5298 795,000 0.33 20 DATO’ SRI IR. YAP CHONG LEE 540921-10-5761 772,500 0.32 21 KHER PEK CHOO 520301-10-5578 640,000 0.26 22 YAP TEONG PENG 491012-71-5011 607,200 0.25 23 YAP BOON HUNG 600704-10-5863 566,500 0.23 24 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 284597-P 510,000 0.21 Pledged Securities Account for Lim Bee Ying 25 YAP WENG YAU 831028-14-6261 500,000 0.21 26 DB (MALAYSIA) NOMINEES (ASING) SDN BHD 317329-W 425,000 0.18 Deutsche Bank AG Singapore for Yeoman 3-Rights Value Asia Fund (PTSL) 27 YAP HONG ENG 351206-10-5014 375,000 0.15 28 YAP BOON WAN 580830-10-5957 344,750 0.14 29 YAP LAY KUAN 730306-10-5134 339,250 0.14 30 YAP LAY MENG 651010-10-7696 333,000 0.14

This page is intentionally left blank. PROXY FORM

CDS Account No. No. of shares held Contact No. SHL CONSOLIDATED BHD. (Company No: 293565-W) (Incorporated in Malaysia)

I/We NRIC / Passport / Company No. of being a member of SHL CONSOLIDATED BHD. hereby appoint NRIC / Passport No. (Proportion: %) of and/or failing him/her, NRIC / Passport No. (Proportion: %) of or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote on my/our behalf at the 25th Annual General Meeting of the Company to be held on Thursday, 29 August 2019 at 11.00 a.m. and at any adjournment thereof, and to vote as indicated below: - Ordinary Resolutions For Against

Resolution 1 To approve the Final Dividend

Resolution 2 To approve the payment of Directors’ fees Resolution 3 To re-elect Dato' Sri Yap Teiong Choon as Director of the Company Resolution 4 To re-elect Wong Tiek Fong as Director of the Company

Resolution 5 To re-elect Au Lai Koong as Director of the Company

Resolution 6 To re-appoint Messrs Khoo Wong & Chan as Auditors of the Company and authorise the Directors to fix their remuneration Resolution 7 To approve the proposed Shareholders’ Mandate for SHL Group to enter into recurrent related party transactions of a revenue or trading nature Resolution 8 Authority to issue and allot shares pursuant to Sections 75 and 76 of the Companies Act 2016 Special Proposed Adoption of New Constitution Resolution

(Please indicate your vote by marking (X) or (√) in the space provided above on how you wish your vote to be cast. Unless voting instructions are indicated in the space above, the proxy will vote or abstain from voting as he/she thinks fit.)

As witness my/our hand(s) this day of , 2019

Signature of Member / Common Seal Notes: (a) Only depositors whose names appear in the Register of Depositors as at 21 August 2019 shall be entitled to attend in person or appoint proxies to attend and/or vote on their behalf at the 25th Annual General Meeting. (b) A member entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy may but does not need to be a member of the Company pursuant to Section 334 of the Act. (c) Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. (d) In the event the member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the Meeting as his/their proxy, provided always that the rest of the form of proxy, other than the particulars of the proxy, have been duly completed by the member(s). (e) In the case of a corporate member, the instrument appointing a proxy must be either executed under its common seal or under the hand of its officer or attorney duly authorised. The corporation may by its resolution of its Board or a certificate of authorisation by the Corporation to appoint a person or persons to act as its representative or representatives to attend and vote on their behalf. (f) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (Omnibus Account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. (g) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 6th Floor, Wisma Sin Heap Lee, 346, Jalan Tun Razak, 50400 Kuala Lumpur not less than forty-eight (48) hours before the time set for the Annual General Meeting or at any adjournment thereof at which the person named in the instrument proposes to vote, or in the case of a poll, not less than 24 hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid. An instrument appointing a proxy to vote at this Meeting shall be deemed to include the power to demand, or join in demanding a poll on behalf of the appointor. Fold here

Please affix Stamp

SHL Consolidated Bhd. (293565-W) 6th Floor, Wisma Sin Heap Lee 346, Jalan Tun Razak 50400 Kuala Lumpur

Fold here t por e R ual 2019 Ann Embracing New Challenges

ANNUAL REPORT 2019