The upward stairway symbolises our zeal “to scale greater heights, bringing DBhd closer towards establishing its foothold in the property industry and becoming the preferred properties, assets and facilities management solutions provider
in Malaysia. We are moving forward
with greater focus and determination for excellence, seizing growth opportunities and synergising our services and“ innovation capabilities to enhance value for all our stakeholders. WHAT’S
CHAPTER 01 | COMPANY
Corporate Information 8 Corporate Structure 8 Group Financial Highlights 10 Awards and Recognitions 2018 12 Media Milestones 13 Key Highlights 14 Board of Directors’ Profile 16 Key Managements’ Profile 24 Group Management 32
CHAPTER 02 | CORPORATE STATEMENTS
Chairman’s Statement 36 Group Managing Director’s Statement and 38 CHAPTER 03 Management Discussion & Analysis | CORPORATE GOVERNANCE Sustainability Statement 46 Corporate Governance Overview Statement 56 Audit Committee Report 59 Statement on Risk Management and Internal Control 64 Statement on Directors’ Responsibility 72 Recurrent Related Party Transactions 73 Additional Compliance Information 75 INSIDE CHAPTER 04 | FINANCIAL STATEMENTS
78 Directors’ Report 82 Statement by Directors 82 Statutory Declaration 83 Independent Auditors’ Report 88 Statements of Comprehensive Income 89 Statements of Financial Position 91 Statements of Changes in Equity 94 Statements of Cash Flows 96 Notes to the Financial Statements
CHAPTER 05 | OTHER INFORMATION
165 List of Properties held by the Group 167 Shareholdings Statistics 170 Shareholdings Statistics - Warrant 173 Notice of Annual General Meeting 178 Statement Accompanying the Notice of Annual General Meeting Proxy Form
VISION MISSION
To Become the Preferred Assets and Synergising Property and Land Development, Facilities Management Integrated Facilities Management and Solutions Provider Project Management Consultancy Services towards Innovative and Effective Solutions
CORE VALUES
Flexible with Integrity Transparent with Clarity United with Synergy Establishing Sustainable Growth AT A GLANCE VALUE SERVICES
RM3.5 billion >55,000 35 years worth of property parking bays operated Development Projects experience in construction management, project planning, and consultant management
>500 1544 5 star hotel Acres of UNdevelopED rooms maintenance AT land in Kuantan and PRPC Rapid johor Johor bahru >30 service offerings
RM200 million 5/5 worth of annual revenue on service quality rating from various contracts at KLIA INternational ranging from 3-5 years airport
4 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Guided by our clear strategy to achieve sustainable business, Damansara Realty Berhad (DBhd) saw an increase in Net Profit by 9% to RM19.5 million compared to last year’s performance, despite challenging market and economic environment in 2018. Moving forward, our goal is to deliver sustainable growth with continuous recurring income for the Group through progressive expansion of our core businesses, enhancing the effectiveness of our organisation structure and functions as well as streamlining our operations to optimise resources and capital to generate better returns.
PROFITABILITY EMPLOYEES
PROFIT AFTER TAX PROFIT before TAX 1,481 RM19.5 million RM7 million Total Workforce +vs 2017
EBITDA 17% > RM205,000 MANPOWER GROWTH +27% vs 2017 REVENUE PER STAFF VS 2017
COMBINED 95%TAKE-UP RATE for Aliff Square 1 & 2
5
BUILDING SCALABLE CAPABILITIES
Advancing via development of a high-quality workforce and technological innovations by encouraging continuous learning, we are committed to create and retain talents whilst harnessing tech- based solutions to create unique value propositions as we evolve to meet changing market needs and job scopes for the future.
CHAPTER 01 | COMPANY
8 Corporate Information 8 Corporate Structure 10 Group Financial Highlights 12 Awards and Recognitions 2018 13 Media Milestones 14 Key Highlights 16 Board of Director’s Profile 24 Key Managements’ Profile 32 Group Management Establishing Sustainable Growth CORPORATEINFORMATI ON STRUCTURE
BOARD OF DIRECTORS DATO’ AHMAD ZAHRI BIN JAMIL Independent Non-Executive Chairman
Ts. BRIAN ISKANDAR BIN ZULKARIM WHOLLY OWNED SUBSIDIARIES: OVERSEAS COMPANIES: Group Managing Director AZHARI BIN ABDUL HAMID 100% 100% Group Executive Director • Damansara Technology Sdn. Bhd. (formerly • Metro Parking (B) Sdn. Bhd. DATO’ MOHD AISOM BIN OMAR known as Damansara Forest Products • Metro Parking Services (India) Independent Non-Executive Director (Malaysia) Sdn. Bhd.) Private Limited ** HAJI ABDULLAH BIN MD YUSOF • Damansara Galaxy Sdn. Bhd. • Metro Parking Management Independent Non-Executive Director • Damansara Prospects Sdn. Bhd. (formerly (Philippines) Inc SHAHRIZAM BIN A SHUKOR known as Kesang Leasing Sdn. Bhd.) • HTS International Ltd • Damansara Realty (Johor) Sdn. Bhd. Independent Non-Executive Director • Damansara Realty (Terengganu) Sdn. Bhd. VINIE CHONG PUI LING • Damansara Realty Construction Sdn. Bhd. Independent Non-Executive Director • Damansara Realty Land Sdn. Bhd. 70% • Metro Parking (S) Pte Ltd • Damansara Realty Management (Timber Operations) Sdn. Bhd. AUDIT COMMITTEE • Damansara Realty Management Services SHAHRIZAM BIN A SHUKOR Sdn. Bhd. 55% • Metro Parking (HK) Limited ** (Chairman) • Damansara Realty Properties Sdn. Bhd. • Damansara Urban Sdn. Bhd. HAJI ABDULLAH BIN MD YUSOF • DAC Land Sdn. Bhd. (Member) • Damansara PMC Services Sdn. Bhd. • Harta Facilities Management Sdn. Bhd. VINIE CHONG PUI LING (Member) • JOLS Construction Sdn. Bhd. • Kesang Construction & Engineering Sdn. Bhd. NOMINATION & REMUNERATION • Kesang Equipment Hire Sdn. Bhd. COMMITTEE • Kesang Industries Sdn. Bhd. * • Kesang Properties Sdn. Bhd. DATO’ MOHD AISOM BIN OMAR • Kesang Trading Sdn. Bhd. (Chairman) • Metro Equipment Systems (M) Sdn. Bhd. * HAJI ABDULLAH BIN MD YUSOF • Metro Parking (M) Sdn. Bhd. (Member) • Metro Parking (Sabah) Sdn. Bhd. • Smart Parking Management Systems VINIE CHONG PUI LING Sdn. Bhd. (Member) • Tebing Aur Sdn. Bhd. • TMR ACMV Services Sdn. Bhd. • TMR Koll Sdn. Bhd. • M.N. Koll (M) Sdn. Bhd. • TMR Urusharta (M) Sdn. Bhd.
8 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
& SUBSIDIARIES: INFORMATI ON 95% • Kesang Kastory Enterprise Sdn. Bhd. 85% • HC Duraclean Sdn. Bhd. 80% RISK MANAGEMENT COMMITTEE STOCK EXCHANGE LISTING • Damansara Realty (Pahang) Sdn. Bhd. DATO’ MOHD AISOM BIN OMAR Main Market Of Bursa (Chairman) Malaysia Securities Berhad Stock Code : 3484 70% HAJI ABDULLAH BIN MD YUSOF Stock Name : DBHD • Kesang Quarry Sdn. Bhd. (Member) • TMR LC Services Sdn. Bhd. AUDITORS SHAHRIZAM BIN A SHUKOR (Member) Messrs. Jamal, Amin & Partners (AF 1067) VINIE CHONG PUI LING 55% No. 60-2B, 2nd Floor • Pedas Quarry Sdn. Bhd. (Member) Jalan 2/23A Off Jalan Genting Klang COMPANY SECRETARY Taman Danau Kota Setapak, 53300 WAN RAZMAH BINTI 51% Kuala Lumpur • DHealthcare Centre Sdn. Bhd. WAN ABD RAHMAN (MAICSA 7021383) T : 03-4142 1626 F : 03 4142 1601 REGISTERED OFFICE E : [email protected] Lot 10.3, Level 10 ASSOCIATED COMPANIES: PRINCIPAL BANKER Wisma Chase Perdana Off Jalan Semantan CIMB Bank Berhad Damansara Heights 50490 Kuala Lumpur 45% WEBSITE ADDRESS • Healthcare Technical Services (PNG) Limited T : 03-2081 2688 F : 03-2081 2690 www.dbhd.com.my E : [email protected]
SHARE REGISTRAR 30% • DAC Properties Sdn. Bhd. Tricor Investor & Issuing House Services Sdn. Bhd. (11324-H) Unit 32-01, Level 32, Tower A Vertical Business Suite Avenue 3, Bangsar South No. 8 Jalan Kerinchi 59200 Kuala Lumpur T : 03-2783 9299 F : 03-2783 9222 E : [email protected]
* Under members’ voluntary liquidation ** Struck off 9 Establishing Sustainable Growth
Revenue (RM’000) 183,596 2016 249,742 2017 304,125 2018
Profit Before Tax (RM’000) (24,317) 2016 19,128 2017 26,116 2018
Profit After Tax (RM’000) (27,734) 2016 17,857 2017 19,541 2018
Shareholders Fund (RM’000) 87,969 2016 147,403 2017 170,178 2018
Earnings Per Share (RM’000) (6.67) 2016 5.48 2017 6.01 2018
Net Assets (RM’000) 95,703 2016 155,719 2017 174,829 2018 GROUP FINANCIAL HIGHLIGHTS
2016 2017 2018 RM’000 RM’000 RM’000
Revenue 183,596 249,742 304,125
Profit/(Loss) Before Tax (24,317) 19,128 26,116
Profit/(Loss) After Tax (27,734) 17,857 19,541
Share Capital 154,685 155,341 159,341
Shareholders Fund 87,969 147,403 170,178
Group Earnings Per Share (Sen) (8.67) 5.48 6.01
Net Asset Per Share (Sen) 30.93 50.17 54.91
Share Price (Sen) 35.00 52.00 23.00
Total Assets 342,724 316,726 332,961
Net Assets 95,703 155,719 174,829
Total No. of Shares (‘000) 309,371 310,371 318,371
10 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Net Assets Per Share Share price (Sen) (Sen)
60 60
55 54.91 55 52.00 50.17
50 50
45 45
40 40 35.00
35 35 30.93
30 30
25 25 23.00
20 20
15 15
10 10
5 5 2017 2018 2017 2018 0 2016 0 2016
11 Establishing Sustainable Growth AWARDS & RECOGNITIONS 2018 Best Projects, Energy & Infrastructure In-House Team in Malaysia AT THE Thomson Reuters’ Asian Legal Business LAW AWARD 2018
focused recognition 7 awards by PETRONAS
12 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
MEDIA MILESTONES
13 Establishing Sustainable Growth
KEYHIGHLIGHTS january 2018 • Introduced HealthMetrics mobile application for employees of DBhd.
APRIL 2018 • Award for achieving full marks on Airport Service Quality (ASQ). Survey done at KLIA by Airport Council International (ACI).
FEBRuary 2018 • DBhd Core Values workshop. • DBhd returned to profitability with RM17.8 million net profit for 2017. • TMR Urusharta (M) Sdn. Bhd. (TMR) team building programme at Natasya Riverside Resort, Perak. MARCH 2018 MAY 2018 • Damansara Hills Health Screening • Metro Parking (M) Sdn. Bhd. (MPM) received a new contract at Pantai Hospital worth Day in collaboration with KPJ Hospital RM1.2 million. at Damansara Hills Kuantan, Pahang. • New contract secured from the Civil Aviation • Corporate Social Responsibility Authority of Singapore worth RM648,000. (CSR) Programme at Surau Sekolah • Group Legal Division won the award for the Kebangsaan Medini Iskandar Puteri, Best Projects, Energy & Infrastructure In- Johor Bahru, Johor. House Legal Team in Malaysia by Asian Legal • CSR Programme at Surau Al-Hidayah, Business. Taman Universiti, Johor Bahru, Johor. • DBhd Group Townhall (Central and Southern). • Board of Directors (BOD) site visit to Pengerang, Johor.
14 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
jUNE 2018 • HC Duraclean Sdn. Bhd. (HCD) Majlis Iftar Ramadhan at Kelab Golf Perkhidmatan Awam, Bukit Kiara. • Negotiate to win masterclass by Ts. Brian Iskandar Zulkarim. • DBhd 56th Annual General Meeting. • DBhd Group Raya Dinner.
jULy 2018 • MPM secured new contracts worth more than RM4 million at National Museum and PETRONAS Station Jalan Kolam Air Lama, Ampang, Selangor.
AUGUST 2018 SEPTEMBER 2018 • Received a contract renewal • Selangor Smart City Exhibition at with PETRONAS Dagangan and MITEC in collaboration with Ori Telekom Malaysia (TM) worth Engineering Sdn. Bhd. over RM3 million. • DBhd as one of the main sponsors for • MPM secured a new contract Damansara Unity Run 2.0, Kuantan, with Malaysia Building Society Pahang. Berhad (MBSB) worth over • Blood donation drive campaign by RM1 million. Kelab Sukan dan Rekreasi Metro • MPM Bowling tournament in Parking. Kuala Lumpur.
NOVEMBER 2018 DECEMBER 2018 • Cancellation of Redeemable Convertible • Malaysia Business Reporting System Notes (RCN). (MBRS) Training. • Beach cleaning CSR Programme in collaboration with the Local Authority or Pihak Berkuasa Tempatan (PBT) at Pantai Batu Layar, Johor.
15 Establishing Sustainable Growth BOARD OF DIRECT
DATO’ AHMAD ZAHRI BIN JAMIL Independent Non-Executive Chairman Academic / Professional Qualification : Bachelor of Arts (History), University of Malaya, Malaysia Date of Appointment / Working Experience : Dato’ Ahmad Zahri was appointed to the Board of Damansara Realty Berhad (DBhd) as an Independent Non-Executive Chairman on 22 August 2014. Prior to this, he was a Director of Johor Corporation (JCorp) from 2009 to 2013 and served as a Director of Yayasan Pelajaran Johor from 2004 to 2013. He was the Chairman of the Executive Committee for Housing, Local Government and Public Amenities of the State of Johor from 2008 to 2013. He was also the State Assemblyman of Sri Medan and Parit Sulong, in Batu Pahat, Johor from 1999 to 2013.
His career began when he was in the Johor Civil Service holding a post at the Batu Pahat Land Office from 1973 to 1974. He later progressed to the Segamat Land Office from 1974 until 1977. From 1977 to 1982, he served at the Office of the Commissioner of Land and Mines, Johor. Thereafter from 1982 to 1986, he was the Private Secretary to the then Menteri Besar of Johor, and subsequently, he was appointed as the Political Secretary at the Prime Minister Office from 1986 to 1987. Directorship(s) : DATO’ AHMAD Listed Companies : Nil Other Public Companies : Nil ZAHRI BIN Family relationship with any director and/or major shareholder: Nil JAMIL Interest in the Company : Age: Gender: Nationality: He holds 20,000 units of ordinary shares in DBhd. Other than as disclosed, he does not have any family relationship with any Director 70 Male and/or major shareholder of DBhd Board Meeting Attendance in 2018 : He attended all five (5) Board Meetings held in the financial year ended 31 December 2018 (FY2018) Length of Service : 4 years 7 months (as at 19 March 2019) Date of Last Re-election: 24 May 2017 Convictions for Offences within Past Five (5) Years : Nil
16 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
BOARD OF DIRECT OR’S PROFILE
Date of Appointment / Working Experience : Ts. Brian Iskandar was appointed as the Group Chief Executive Officer (CEO) of DBhd on 1 September 2016. He was promoted Group Managing Director on 2 July 2018 after leading the successful turnover of DBhd’s performance from red to black within the first year of his service. Previously, he was the General Manager, Transformation Management of Malaysia Airports Holdings Berhad (MAHB). He started his professional career in 1997 as a Maintenance and Consultant Engineer in the United State of America (USA). His experience and expertise cover areas of Corporate Planning & Transformation, Assets & Facilities Management, Overseas Investments & International Business, Airport Planning & Operations, Corporate Restructuring and Project Management. Prior to that, from September 2011 to September 2015, he was the CEO of MAHB’s facilities management subsidiary, Urusan Teknologi Wawasan Sdn. Bhd. (UTW). During his tenure as the CEO, UTW transformed from a loss Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) position to become one of the most profitable facilities management companies in Malaysia and ranked top three in the country’s industry market share, with Compound Annual Growth Rate (CAGR) of 217% from 2011 to 2015. From 2009 to 2011, he served as the General Manager (Overseas Ventures) for MAHB and was responsible for monitoring the management of MAHB’s international airport investments in India, Maldives and Turkey; in addition to spearheading and participating in airport acquisition bids around the world. He has also served as CEO of a multimodal international logistics company prior to joining MAHB in 2009. Before that, he served as Regional Director (Asia) for an international company specialising in homeland security equipment and drug detection and identification Ts. BRIAN systems. In December 2017, he received the professional certification from ISKANDAR BIN the MBOT, as a Professional Technologist which carries the title ‘Ts.’. Directorship(s) : ZULKARIM Listed Companies : Nil Age: Gender: Nationality: Other Public Companies : Nil Family relationship with any director and/or major 45 Male shareholder: Nil Interest in the Company : Nil Ts. BRIAN ISKANDAR ZULKARIM Board Meeting Attendance in 2018: Group Managing Director He attended all five (5) Board meetings held in the FY2018, of which Board Committee Membership(s) two (2) Board meetings as a Board member following his appointment • Tender Committee as Group Managing Director on 2 July 2018, and another 3 Board meetings while he was the Group CEO Academic / Professional Qualification : Length of Service : 2 years 6 months (as at 19 March 2019) • Master of Business Administration • Bachelor of Science in Mechanical Engineering Date of Last Re-election: Nil • Professional Technologist (Ts.) from the Malaysian Board of Technologists (MBOT) Convictions for Offences within the past five (5) yearsNil :
17 Establishing Sustainable Growth
Board of Director’s profile (cont’d)
AZHARI BIN ABDUL HAMID Group Executive Director Academic / Professional Qualification : • Bachelor of Economics (Hons), University of Malaya, Malaysia • British Institute of Cleaning Science, United Kingdom
Date of Appointment / Working Experience : Azhari was appointed as the Group Executive Director of DBhd on 2 July 2018. Prior to that, he was the Managing Director of HC Duraclean Sdn. Bhd. (HCD), a subsidiary of DBhd from 1998 to July 2018. His career started with JCorp since 1989. In 1991, he was seconded to Harta Consult Sdn. Bhd., a subsidiary of JCorp until 1996. Due to his excellent service and contribution, he was promoted as the General Manager of Johor Franchise Development Sdn. Bhd., a subsidiary of JCorp in 1997.
During his career, he has been accoladed by JCorp as ‘Intrapreneur of the Year’ and ‘Outstanding CSR Award’ in 2005/2006. He was also awarded with ‘Distinguished Achievement Award 2000’ from International Franchise Association (USA). His achievement also has been recognised by the Malaysian Franchise Association for Master Franchise of the Year in 2005. Directorship(s) : Listed Companies : Nil Other Public Companies : Nil AZHARI BIN Family relationship with any director and/or major shareholder: Nil ABDUL Interest in the Company : HAMID He holds 291,854 ordinary shares or 14.59% in HC Duraclean Sdn. Bhd., a subsidiary of DBhd Age: Gender: Nationality: Board Meeting Attendance in 2018 : 53 Male Since his appointment as the Group Executive Director of DBhd on 2 July 2018, he had attended all two (2) Board Meetings held in the FY2018 Length of Service : 21 years 6 months (as at 19 March 2019) Date of Last Re-election : Nil Convictions for Offences within Past Five (5) Years : Nil
18 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Board of Director’s profile (cont’d)
DATO’ MOHD AISOM BIN OMAR Independent Non-Executive Director Board Committee Membership(s) • Risk Management Committee (Chairman) • Nomination and Remuneration Committee (Chairman) Academic / Professional Qualification : Bachelor of Law (LLB Hons), University of Malaya, Malaysia Date of Appointment / Working Experience : Dato’ Mohd Aisom was appointed to the Board of DBhd on 15 December 2015. He was a Legal Assistant at Messrs Tahir & Salleh in Johor Bahru during a one-year stint in 1983. In 1984, he ventured into the corporate world to join Sri Tenaga Perunding Sdn. Bhd. as the General Manager, Corporate and Legal Affairs. He later joined Astaka Group of Companies as the Group General Manager, Legal Affairs.
In pursuit of his passion in legal practice, he joined Messrs Zamani Ibrahim, Tarmizan & Co. as a Partner in June 2004. In 2005, he set up his own legal practice through Messrs Omar Ismail & Co, which is now known as Messrs Omar Ismail, Hazman & Co. Directorship(s) : Listed Companies : Nil Other Public Companies : Nil DATO’ MOHD Family relationship with any director and/or major shareholder: Nil AISOM BIN Interest in the Company : Nil OMAR Board Meeting Attendance in 2018 : He attended all five (5) Board Meetings held in the FY2018 Age: Gender: Nationality: Length of Service : 3 years 3 months (as at 19 March 2019) 62 Male Date of Last Re-election : 27 June 2018. Convictions for Offences within Past Five (5) Years : Nil
19 Establishing Sustainable Growth
Board of Director’s profile (cont’d)
HAJI ABDULLAH BIN MD YUSOF Independent Non-Executive Director Board Committee Membership(s) • Audit Committee • Nomination and Remuneration Committee • Risk Management Committee • Tender Committee Academic / Professional Qualification : Bachelor of Arts in History (Hons), University of Malaya, Malaysia Date of Appointment / Working Experience : Haji Abdullah was appointed to the Board of DBhd on 6 June 2014. He is the Chairman of Polytax and Accounting Services, a company which provides Company Secretarial and Business Consultancy services since 2004. From 2007 to 2014, he served as a member of Majlis Bandaraya, Johor Bahru, and he was then reappointed in 2016 as a member until 2018. In 2015, he was appointed as Executive Chairman of Pandan Uptown Sdn. Bhd. He is also a member of Jawatankuasa Majlis Usahawan and Koperasi Negeri Johor since 2005.
Since 2011, he has also served the community as Ketua Penerangan Majlis / Vice President Gabungan NGO Melayu Negeri Johor (GABUNG) and as Yang DiPertua (YDP) Persatuan Penjaja, Peniaga dan Pengusaha Industri Kecil Melayu, Johor Bahru since 2002. HAJI Directorship(s) : ABDULLAH BIN Listed Companies : Nil Other Public Companies : Nil MD YUSOFF Family relationship with any director and/or major shareholder: Nil Age: Gender: Nationality: Interest in the Company : Nil 52 Male Board Meeting Attendance in 2018 : He attended all five (5) Board Meetings held in the FY2018 Length of Service : 4 years 9 months (as at 19 March 2019) Date of Last Re-election : 30 June 2016 Convictions for Offences within Past Five (5) Years : Nil
20 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Board of Director’s profile (cont’d)
SHAHRIZAM BIN A SHUKOR Independent Non-Executive Director Board Committee Membership(s) • Audit Committee (Chairman) • Risk Management Committee Academic / Professional Qualification : • Bachelor of Accountancy (Hons), University Putra Malaysia, Malaysia • Member of the Malaysian Institute of Accountants (MIA) • Associate member of Certified Practising Accountants (CPA), Australia Date of Appointment / Working Experience : Shahrizam was appointed to the Board of DBhd on 15 December 2015. He started his career at Coopers & Lybrand in 1996 and then joined Messrs Azman, Wong Salleh & Co. until 2002 in the areas of auditing and financial advisory.
He then set up his own financial advisory firm, known as Westland Consulting Sdn. Bhd. and currently he is the Chief Financial Officer of TH Travel & Services Sdn. Bhd., a wholly-owned subsidiary of Lembaga Tabung Haji. SHARIZAM Directorship(s) : Listed Companies : Nil BIN A SHUKOR Other Public Companies : Nil Family relationship with any director and/or major shareholder: Nil
Age: Gender: Nationality: Interest in the Company : Nil 47 Male Board Meeting Attendance in 2018 : He attended all five (5) Board Meetings held in the FY2018 Length of Service : 3 years 3 months (as at 19 March 2019) Date of Last Re-election : 27 June 2018 Convictions for Offences within Past Five (5) Years : Nil
21 Establishing Sustainable Growth
Board of Director’s profile (cont’d)
VINIE CHONG PUI LING, CFA Independent Non-Executive Director Board Committee Membership(s) • Board Audit Committee • Nomination and Remuneration Committee • Risk Management Committee Academic / Professional Qualification : • Bachelor of Commerce, The University of Melbourne, Australia • Victorian Certificate of Education (VCE), Australia • A CFA Charterholder (Chartered Financial Analyst) • Associate member of Certified Practising Accountant (CPA), Australia Date of Appointment / Working Experience : Vinie was appointed to the Board of DBhd on 1 July 2018. She has extensive experience in investment and fundraising exercises, which have won numerous prestigious awards from the esteemed RAM Rating, Euromoney, Triple A Asset Award, International Financing Review and Alpha Southeast Asia for best transactions and innovation in finance. She started her career in 2001 with an asset management firm as an Executive in product development and marketing, and subsequently joined a boutique financial advisory firm in 2003 as a Senior Financial Analyst covering Malaysia and the Middle East regions. She later joined Malaysia’s largest business process outsourcing firm, Efficient E-Solutions Berhad Group in 2007 as a Manager in the CEO’s office in charge of corporate finance, business advisory, investment and cross- functional initiatives. She was appointed as the General Manager, Corporate Finance, Treasury & Investor Relations at Malaysia Airports Holdings Berhad (MAHB) in 2014, overseeing the investment and finance strategy area, and was instrumental in the mergers and acquisitions transactions which propelled MAHB to the second largest listed airport group in the world in 2015. She served as the Board member in two of MAHB’s investee companies in 2015 - Segi Astana Sdn. Bhd. which VINIE CHONG owns and operates the shopping mall connected to klia2; and MFMA Development Sdn. Bhd. which operates the premium outlet park in PUI LING Sepang. Her last position was with Astro Malaysia Group as the Vice President of Strategy & Commercial, which she had led financial transformation and strategic repositioning of Astro’s production business as the Age: Gender: Nationality: largest production house in the region. 40 Female She was twice voted as the best investor relations professional in Asia in the globally renowned Institutional Investor’s survey for the All- Asia Executive Team, for transportation and industrial sectors in 2013 and 2015 respectively. Board Meeting Attendance in 2018 : Directorship(s) : Since her appointment as Director on 1 July 2018, she had Listed Companies : Nil attended all two (2) Board Meetings held in the FY2018 Other Public Companies : Nil Length of Service : 8 months (as at 19 March 2019) Family relationship with any director and/or major shareholder: Nil Date of Last Re-election : Nil Interest in the Company : Nil Convictions for Offences within Past Five (5) Years Nil:
22 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Board of Director’s profile (cont’d)
WAN RAZMAH BINTI WAN ABD RAHMAN, ACIS Company Secretary Academic / Professional Qualification : • Chartered Secretary of the Institute of Chartered Secretaries and Administrators (ICSA) United Kingdom • Member of the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) Date of Appointment / Working Experience : Wan Razmah was appointed as the Company Secretary of DBhd on 15 March 2017.
Her career in public listed company began in 1996 when she joined Amcorp Properties Berhad as an Assistant Company Secretary and later joined Idaman Unggul Berhad as the Company Secretary and Head of Human Resources. In 2014, she joined Malaysia Airports Holdings Berhad (MAHB) as Senior Manager, Company Secretarial Division and thereafter in 2016, as the Corporate Affairs Manager at Tune Group Sdn. Bhd. Directorship(s) : Listed Companies : Nil WAN RAZMAH Other Public Companies : Nil Family relationship with any director and/or major BINTI WAN ABD shareholder: Nil Interest in the Company : Nil RAHMAN Convictions for Offences within Past Five (5) Years : Nil Age: Gender: Nationality: 50 Female
23 Establishing Sustainable Growth KEY MANAGEMENTs’ PROFILE EXECUTIVE COMMITTEE (EXCO) MEMBERS
01 02 Ts. BRIAN ISKANDAR AZHARI BIN ABDUL HAMID BIN ZULKARIM Group Executive Director Group Managing Director For details of Azhari bin Abdul Hamid’s profile, EXCO Chairman please refer to page 18 of this Annual Report. For details of Ts. Brian Iskandar bin Zulkarim’s profile, please refer to page 17 of this Annual Report. 24 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
KEY MANAGEMENTS’ profile Exco Members (cont’d)
03 ZAIN AZRAI BIN ZAINUDDIN Group Chief Financial Officer
Age / Gender : 46 / Male
Nationality : Malaysian
Academic / Professional Qualification : • Bachelor of Business (Accounting), Monash University, Melbourne, Australia • Member of Malaysian Institute of Accountants (MIA) • Member of Certified Practicing Accountant (CPA), Australia
Date of Appointment / Working Experience Zain was appointed as the Group Chief Financial Officer of DBhd on 1 September 2016. He has more than 20 years of experience in auditing, consultancy and finance.
Prior to joining DBhd, he was appointed as the Vice President of the Finance Department, UDA Holdings Berhad (UDA) and was later promoted to Senior Vice President leading UDA’s Group Finance in 2015.
He began his career in 1995 with Messrs Deloitte Kassim Chan (Deloitte), Malaysia and Deloitte & Touche, New Jersey, USA. In 2007, he joined Pricewaterhouse Coopers (PwC) Advisory Services Sdn. Bhd. in Transaction Services Department specialising in merger and acquisition.
Directorship(s) : Listed Companies : Nil Other Public Listed Companies : Nil
Interest in the Company : Nil
Convictions for Offences within Past Five (5) Years : Nil
25 Establishing Sustainable Growth
KEY MANAGEMENTS’ profile Exco Members (cont’d)
04
Academic / Professional Qualification : • Master in Engineering Business Management, University of Warwick, United Kingdom • Bachelor of Science (Majoring in Civil Engineering), University of Nottingham, United Kingdom • Member of the Institute of Engineers, Malaysia • Registered Professional Engineer, Board of Engineers, Malaysia • Registered Electrical Energy Manager by Suruhanjaya Tenaga (ST) • Registered Green Building Facilitator of Green Building Index • Professional Technologist (Ts.) from the Malaysian Board of Technologists (MBOT) • Associate Member Institute of Property & Facility Managers (AMIPFM)
Date of Appointment / Working Experience : Ir. Ts. Yahaya was appointed as the Group Chief Operating Officer of DBhd on 1 December 2017. His career started as a Civil Engineer with JCorp in 1980 and due to his excellent service and contribution, he was promoted as the Manager in the Technical Department of JCorp. He later progressed to become the Deputy General Manager of Total Project Management Sdn. Bhd., a subsidiary of JCorp in 1991. In Total Project Management Sdn. Bhd., he was responsible to manage all of JCorp construction and development projects. In 1992, he was promoted as the General Manager of Total Project Management Sdn. Bhd. In 1993, he was involved in the development of Ampang Puteri Specialist Hospital and Damansara Specialist Hospital until the hospitals were completed in 1995 and 1997 respectively. In 1995, he was transferred to Johor Technopark Sdn. Bhd., another subsidiary of JCorp. He was offered to join KPJ Healthcare Berhad (KPJ) in 1997 as Chief Operating Officer. Among his tasks were to overlook the new development, hospital refurbishment and the facilities management and biomedical equipment management of all 20 numbers of KPJ hospitals. With the vast experience in the construction, project management & facilities management and biomedical engineering planning & management, he was promoted as the Senior Group General Manager of KPJ in 2002 to manage strategic planning, development, marketing, human resource and training. He is a Committee Member of the Surveyor’s Committee of Malaysian Society for Quality in Health (MSQH) which is solely responsible for accrediting all the hospital in Malaysia and a lead surveyor of MSQH for engineering and environment services since 2001. From the Green Building Index, Ir. Ts. Yahaya has been appointed as Green Building facilitator since 2011. He is also a member of Industrial Advisory Panel (IAP) for Faculty of Biosciences and Medical Engineering from Universiti Teknologi Malaysia since 2009 and a Registered Electrical Energy Manager (REEM) of Suruhanjaya Tenaga since 2014. He is also a member of Kuala Lumpur Malay Chamber of Commerce since 2016. In December 2017, he was appointed as the Industrial Interviewer panel for professional engineer programme UniMara.
In 2017, he received the Certificate by Malaysian Board of Technologist (MBOT) as Professional Technologist which carries the title of P.Tech or Ts. In 2018, he received membership from Malaysia Institute of Property & Facility Managers as an associate member (AMIPFM). Ir. Ts. YAHAYA BIN Directorship(s) : HASSAN Listed Companies : Nil Group Chief Operating Officer Other Public Listed Companies : Nil
Age / Gender : 61 / Male Interest in the Company : Nil
Nationality : Malaysian Convictions for Offences within Past Five (5) Years : Nil
26 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
KEY MANAGEMENTS’ profile Exco Members (cont’d)
05 SYED ZULKIFLI BIN SYED ISMAIL Group Chief Strategy Officer
Age / Gender : 34 / Male
Nationality : Malaysian
Academic / Professional Qualification : • Master in Business Administration (MBA), Universiti Teknologi Mara (UiTM), Malaysia • Bachelor of Economics, Universiti Malaysia Terengganu (UMT), Malaysia
Date of Appointment / Working Experience : Syed Zulkifli joined DBhd as Head of Corporate Planning & Transformation, in September 2016 where he played an instrumental role towards successful implementation of the Group’s Strategic Restructuring Plan (SRP) that helped DBhd’s turnaround to profitability in 2017.
He was appointed as DBhd’s General Manager Planning & Corporate Services on 1 October 2017 following the implementation of the Group’s shared services initiative; aimed to enhance shared services efficiency for the Group.
He was then redesignated as the Group Chief Strategy Officer on September 2018 following the launch of DBhd’s 5-year business plan named SRP-2022; designed to strategically deliver sustainable profits for the Group in the future.
Syed Zulkifli is currently leading the Corporate Shared Services function which includes Corporate Planning & Transformation, Human Resource (HR) Strategy, HR Operations, Marketing & Communications (Marcom), Legal, Contract Advisory & Risk Management as well as Procurement Division.
Prior to joining DBhd, he was attached to Malaysia Airports Holdings Berhad (MAHB) as the Manager of Transformation Management Office since 2015. He had also held several other positions in MAHB’s Planning & Development Division from 2010 to 2015.
Directorship(s) : Listed Companies : Nil Other Public Listed Companies : Nil
Interest in the Company : Nil Convictions for Offences within Past Five (5) Years : Nil
27 Establishing Sustainable Growth
KEY MANAGEMENTS’ profile Exco Members (cont’d)
06 AZUAN BIN HJ ABU BAKAR General Manager of Group Business Development
Age / Gender : 42 / Male
Nationality : Malaysian
Academic / Professional Qualification : • Bachelor of Computer and Management, CICT International College Malaysia Twinning Programme with James Watt College, United Kingdom • Diploma in Computer & Management Admin, CICT International College (CICT), Malaysia
Date of Appointment / Working Experience : Azuan was appointed as General Manager, Group Business Development of DBhd on 18 July 2018.
He started his career as the Customer Services Executive for the Customer Access Unit of Microsoft Malaysia in 1997. From 2001 to 2008, he joined Formis Group of Companies as the Strategic Channel and Account Manager. Subsequently, in 2008, he served as the Country Manager for CMS I – System (India) Pvt. Ltd. and CMI I System (Dubai).
From 2014 to 2017, he joined Masterplan Consulting Sdn. Bhd. as the Head of Corporate Affairs where he gained extensive experience in the field of corporate affairs and communications. Prior to that, he was in the position of Head Marcom for TIME dotCom Berhad from 2011 to 2013.
Later in 2017, he joined TMR Urusharta (M) Sdn. Bhd. as the General Manager of Stakeholder Relations and Business Development to develop the company by acquiring new clients for new business before he promoted as General Manager, Group Business Development in DBhd.
Directorship(s) : Listed Companies : Nil Other Public Listed Companies : Nil
Interest in the Company : Nil
Convictions for Offences within Past Five (5) Years : Nil
28 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
KEY MANAGEMENTS’ profile Exco Members (cont’d)
07 ABD JALIL BIN PANDI Managing Director of Metro Parking (M) Sdn. Bhd.
Age / Gender : 54 / Male
Nationality : Malaysian
Academic / Professional Qualification : • Bachelor of Engineering in Electronic & System Engineering, Universiti Kebangsaan Malaysia (UKM), Malaysia • Radiation Protection Officer (Agensi Nuclear Malaysia)
Date of Appointment / Working Experience : Abd Jalil was appointed as the Managing Director of Metro Parking (M) Sdn. Bhd. (MPM) on 24 September 2014. He began his career in 1987 with Thomsom Audio Kulim as QA Assistant Engineer, Process Engineer and Safety and Reliability Engineer until 1990.
Later, he joined PNE Electric Sdn. Bhd. in 1990 as the Senior Product Engineer. In 1995, he joined Opto Sensors (M) Sdn. Bhd. / Rapiscan Pte. Ltd. as the Service Engineer, Service Manager Asia Pacific for Rapiscan Security Products.
In 2005 to 2012 he held a position of Service Manager, General Manager of Wafada Technic Consult Sdn. Bhd. prior to joining Sharikat Sukma Kemajuan dan Perusahaan Sdn. Bhd. as the Technical Director from 2012 to 2014.
Directorship(s) : Listed Companies : Nil Other Public Listed Companies : Nil
Interest in the Company : Nil Convictions for Offences within Past Five (5) Years : Nil
29 Establishing Sustainable Growth
KEY MANAGEMENTS’ profile Exco Members (cont’d)
08 SHAMSUL BIN MOHD SALLEH Managing Director of TMR Urusharta (M) Sdn. Bhd.
Age / Gender : 52 / Male
Nationality : Malaysian
Academic / Professional Qualification : • Bachelor of Science in Mechanical Engineering, Southern Illinois University at Carbondale, United State of America • Certificate Level 1, Thermographer, Infrared Training Centre – Europe & Asia • Professional Member, The Institute of Internal Auditors Malaysia
Date of Appointment / Working Experience : Shamsul was appointed as the Managing Director of TMR Urusharta (M) Sdn. Bhd. on 12 January 2017.
His career started as Junior Production Executive of Panasonic AVC Network (M) Sdn. Bhd. in 1992. In 2000, he was promoted as a Production Manager for final assembly to bring the achieving Departmental Targets on efficiency, and a leader for new production assembly method from conventional line assembly to cell Assembly. With his vast experience and excellent job, he was promoted to Senior Production Manager Audio assemblies.
Later, he joined TMR Urusharta (M) Sdn. Bhd. from 2007 until 2014 as the Deputy General Manager for Engineering and Technical Support. In 2016, he was transferred to DBhd to hold the position as the General Manager and Head of Business Planning Unit with the main task to formulate planning and strategies for new business development and re-engineering processes until prior to his appointment as the Managing Director of TMR Urusharta (M) Sdn. Bhd. in 2017.
Directorship : Listed Companies : Nil Other Public Listed Companies : Nil
Interest in the Company : Nil Convictions for Offences within Past Five (5) Years : Nil
30 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
KEY MANAGEMENTS’ profile Exco Members (cont’d)
09 RUSHDAN BIN RAMLI Managing Director of Damansara PMC Services Sdn. Bhd.
Age / Gender : 49 / Male
Nationality : Malaysian
Academic / Professional Qualification : • Bachelor of Economics, International Islamic University, Malaysia • Post Graduate Diploma in Hospital Management, South Bank University, United Kingdom • Diploma in Management, Henley Business School, University of Reading, United Kingdom
Date of Appointment / Working Experience : Rushdan was appointed as the Managing Director of Damansara PMC Services Sdn. Bhd. (DPMC) on 1st October 2018. His career started as Executive Trainee of KPJ Healthcare Berhad (KPJ) in 1994, before been appointed to KPJ’s Commissioning Team as Corporate Executive. During his tenure in the Commissioning Team, he was successfully commissioned KPJ Ampang Puteri Specialist Hospital and KPJ Damansara Specialist Hospital. In 2000, he was appointed as the Business Development Manager of KPJ Damansara Specialist Hospital.
After five years in hospital operation, he later joined Healthcare Technical Services Sdn. Bhd. (HTS) in 2006 as Senior Operation Manager and became the Assistant General Manager in 2009. He was promoted as General Manager in 2013 and subsequently in 2015 became the Chief Financial Officer of HTS.
Following his success, he was then promoted as the Managing Director of HTS in 2017.
Directorship(s) : Listed Companies : Nil Other Public Listed Companies : Nil
Interest in the Company : Nil Convictions for Offences within Past Five (5) Years : Nil
31 Establishing Sustainable Growth
GROUP Management
MOHD AFIQ FARHAN JUFNI BIN MOHD ISA AZULLAIHA SAFIAH BIN MD HANIF MOHD JAMIL BIN MOHD DAUD BINTI ABDULLAH BINTI ADNAN Head of Group Head of Property & Head of Group Head of Group Head of Group Corporate Planning & Land Development Finance Internal Audit Human Resource Transformation (Operation)
32 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
AUZAN SYAIDI ALLIA OMAR BIN OSMAN SUHANA LOKMAN HAKIM BIN ABDUL LATEH BINTI ZAINUN Head of Group BINTI MOKHTAR BIN ZUBIR Head of Group Head of Group Corporate Finance Head of Head of Group Contract Human Resource Group Legal Procurement Advisory & Risk (Strategy) Management
33
OPTIMISING CROSS- FUNCTIONAL SYNERGIES
Going beyond expectations by continually developing and delivering interrelated and complementary services across our business segments, we actively identify and pursue opportunities in related fields as we aim to become an established property developer and a one-stop solutions provider for IFM services for assets and facilities management in Malaysia.
CHAPTER 02 | Corporate Statements
36 Chairman’s Statement 38 Group Managing Director’s Statement and Management Discussion & Analysis 46 Sustainability Statement Establishing Sustainable Growth CHAIRMAN’S STATEMENT DATO’ AHMAD ZAHRI BIN JAMIL
Independent Non-Executive Chairman
Dear Shareholders, Given this uncertainty and cautious sentiment, it was no surprise that most of the property developers have recalibrated I am thrilled to report another year of profit, their focus towards affordable and mid- range properties in a bid to stay afloat in the a 9% increase from the year before. This is a slower market. This led to an increasingly significant milestone for Damansara Realty competitive landscape as developers strived to outdo each other in giving buyers Berhad (DBhd) as it marks the second the best value-for-money properties. year of profitability, and a testament to the +9% TAPPING INTO ORGANIC GROWTH restructuring plan that we put in place in increase vs 2017 For the year in review, we progressed late 2016 that strengthens our resilience GROUP’S PROFIT AFTER TAX (PAT) significantly on our strategic plans, amidst challenging landscapes. keeping our focus firmly on the dual aim of increasing growth on an organic basis It seemed that the dampened property sector in 2017, while streamlining our operations for had resumed in 2018 and the downtrend continued due to maximum returns. Our efforts to grow buyers’ perspective. Not only did they have to grapple with organically has seen the Group improve stringent loan requirements imposed by the banks, but they its operating profits while expanding the were also affected by the unfavourable market sentiment. RM scope and services of several contracts This was further compounded with the overall slowing from the Integrated Facilities Management down of global economic growth, escalating China-US trade (IFM) business segment, especially with tensions, and fluctuating currencies and oil prices around our Rapid Pengerang project. the world. The International Monetary Fund had revised Operating Profit We have also been resolute in our efforts downward its global economic and trade growth forecasts to streamline the business, taking the for 2018, while Bank Negara Malaysia (BNM) in August 2018 steps to dispose several subsidiaries to lowered its estimate for Malaysia’s full-year Gross Domestic align ourselves in achieving greater synergy Product (GDP) growth to 5%, from an earlier estimate of for the Group. This includes the disposal 5.5% to 6%. All these paint a backdrop of a challenging year of 70% stake in Healthcare Technical in review. 98% Services Sdn. Bhd. (HTS) to JCorp for a sale OF TOTAL PAT consideration of RM11 million. 36 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
announced in February 2019 by the Ministry of Water, Land and Natural Resources. This is an exciting time for DBhd and its subsidiary Damansara Realty (Pahang) Sdn. Bhd. (DRP) which has about 500 acres of bauxite-rich land in Pahang with reserves estimated by our appointed mining consultant in 2018 to be more than 5 million metric tonnes. The Board of Directors (the Board) is currently considering various options to materialise the potential income from mineral mining activity, as well as relevant systems and processes needed for environmental protection to ensure we do not pollute the environment while conveying our business activities.
APPRECIATION
The Board joins me to express our gratitude to YB Dato’ Daing A Malek bin Daing A Rahaman, Executive Vice Chairman, YB Datuk Md Othman bin Yusof, Independent Non-Executive Director, Encik Wan Azman bin Ismail, Non-Independent Non-Executive Director, and Puan Zainah binti Mustafa, Senior Independent Non- Executive Director, who stepped down from the Board towards the end of the With our inherent strengths, we have expect to contend with these challenges year in review. They left the Group in a aligned our businesses by leveraging our that are likely to have an impact on our very good position, having helped steer capabilities as both property developer and business, especially with regard to the the company towards its restructuring and project management consultant in offering property and land development segment. now, profitability. I also want to extend a a more holistic hospital and medical centre Moving into financial year 2019, we will warm welcome to our newly appointed construction and development services. continue on course with our Strategic Independent Non-Executive Director, These efforts put us on a firm footing to be Restructuring Plan, aiming to grow in Puan Vinie Chong Pui Ling, as well as a more efficient and leaner organisation, our areas of speciality while continuing Ts. Brian Iskandar bin Zulkarim, who joins looking organically at areas of strength for to look at ways to maximise efficiency. the Board having been appointed as the further growth. This may mean more collaborations with Group Managing Director after two years as Group Chief Executive Officer, and Encik THE PATH AHEAD like-minded partners as well as resolute reviews of timelines for projects that may Azhari bin Abdul Hamid, Managing Director We expect to continue facing the headwinds not warrant yields under current market of HC Duraclean Sdn. Bhd., who joins the into 2019. Analysts say Malaysia’s economy conditions, especially in our property Board as Group Executive Director. is expected to see lukewarm albeit stable segment. My appreciation also goes to my fellow growth at 5% in 2019 as dampened external While we do not expect it to be an easy Board members who have been steadfast demand and slowing global growth and in their support and guidance towards trade, continue to weigh on the country. year ahead for us, we are grounded in the resilience and proven results that we strengthening the core of our business. Private sector activities will continue to be My sincere appreciation is extended to the primary drivers of growth, while public have seen over the past two years arising from our restructuring of strategies and the management and employees of the consumption and investment could soften Group for their dedication to delivering in view of measures introduced by the operations. As we move ahead, we will continue to be guided by being prudent positive results. Our appreciation is warmly government to manage the rising national extended to our business partners for their debt. in our cost management, coupled with required investments for future growth. collaboration, and to our shareholders for On the flip side, domestic consumption The IFM market continues to show great their trust and support. I look forward to could see a slight boost following the potential, followed by Project Management all of us continuing to work together for a decision to revert to the sales and service & Consultancy Services (PMC), but the brighter tomorrow for DBhd. tax (SST) from the goods and services property sector will remain challenging. tax (GST) which could result in higher disposable income due to relatively lower Meanwhile, we welcome the end of DATO’ AHMAD ZAHRI BIN JAMIL prices in most goods and services. We the moratorium on bauxite mining as Independent Non-Executive Chairman 37 Establishing Sustainable Growth Group Managing Director’s Statementand Management Discussion & Analysis
Ts. BRIAN ISKANDAR BIN ZULKARIM
Group Managing Director
38 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
OVERALL PERFORMANCE than 95% for Aliff Square 1 and 2, we are studying and identifying the criteria for the 2018 has gone by and it was a colourful time next phase of commercial development. for DBhd. We have sustained profitability and completed the year with a 9% increase In the Integrated Facilities Management in the Group’s Profit After Tax (PAT) from (IFM) industry, we noticed a significant the previous year. This stellar achievement trend among asset owners, especially in solidified the Group’s second straight year Malaysia, where the shift is seen towards of profitability since 2017. It reflects our RM3.5 BILLION integration of services with technology- relentless efforts towards becoming the WORTH OF PROPERTY DEVELOPMENT based solutions that can revolutionise preferred assets and facilities management PROJECTS how asset managers maintain their solutions provider in Malaysia. properties. According to Deputy Secretary- General of Treasury, Dato’ Othman Semail, The year 2018 was a challenging year for our Bhd. (Country Garden) recorded a 67.5% the Ministry manages over 38,119 segments. The stagnant pricing index in the average take-up rate for its first phase government-related facilities across property sector can be observed in Malaysia. development of Central Park project in Malaysia with maintenance and repairs According to Bank Negara Malaysia’s (BNM) Tampoi, Johor Bahru consisting of more allocation of more than RM10 billion analysis published in November 2017, there than 1100 units of high-rise residential per annum. The high cost is based on is an imbalance between demand and properties. The project is targeted to be conventional facilities management (FM) supply in the country’s property market. completed in 2023 and shall consist of over operations which rely heavily on extensive More than 130,000 units of residential 10,000 units of mixed high-rise and landed human labour for all related services properties, of which 85% were priced above residential properties located in the middle including cleaning, maintenance, repair- RM250,000 per unit, remain unsold. In of the Tampoi main business area with an works and the security of these assets. September 2018, when BNM published an estimated gross development value (GDV) He reiterated that the government is update, the number of unsold residential of more than RM3.5 billion. Meanwhile, looking to reduce the yearly maintenance properties had increased to 146,196 units, based on the high take-up rate of more cost within the next few years resulting in a 12% hike. smaller maintenance contracts value for In view of the said market imbalance, BNM industry players, especially government- is expected to impose policies to encourage related assets and buildings. the rental market, increase efficiency in To stay relevant and competitive, the the allocation of affordable homes, as Group has proactively been looking into well as to restrict new financing for future enhancing our tech-driven solutions property development projects. With this tailored to the needs of our clients. In 2018, in mind, property developers such as DBhd we developed our own cashless payment needs to be very selective in developing Combined system for our client’s food and beverages our future property projects. Location Take-Up Rate (F&B) facilities in Rapid Pengerang. We and affordability are still keys to success in also developed a more complex security- matching the market demand and supply control mobile application for the same for both commercial and residential units in customer to facilitate personnel entry Malaysia. and exit at the facilities under our Despite the challenges in the property management. We believe that by providing >95% various technology-based solutions to sector, DAC Properties Sdn. Bhd., our 30% associate joint venture company For Aliff Square 1 & 2 assist our clients in managing their assets and facilities will eventually help them to with Country Garden Management Sdn. AS AT DECEMBER 2018 achieve their business objectives.
Revenue government-related facilities across Malaysia with maintenance and repairs allocation of 38,119 more than +22% vs 2017 RM10 BILLION PER ANNUM
39 Establishing Sustainable Growth
Group Managing Director’s Statement AND
Management Discussion & Analysis (cont’d)
FINANCIAL REVIEW Our IFM contracts in Johor are worth 2018 Financial Highlights more than RM170 million which include the operations and maintenance of The Group posted a Net Profit of RM19.5 million for the 1544 executive cabins similar to a 5 star financial year ended 31 December 2018; an increase of hotel, known as The Hive. The contracts 9% compared to the full year 2017 result of RM17.8 EBITDA include preparation of minimum three million. The main contributor to the increase in PAT meals per day for the guests, cleaning was the better-than-expected performance by all of more than and sanitation services, laundry services, our business segments, especially the IFM segment. landscaping, mechanical, electrical, and civil & structural maintenance. We are also Overall, the Group recorded RM304 million turnover, responsible for the cleaning, operation an increase of 22% or RM54 million additional revenue and maintenance of the clubhouse which compared to the same period in the 2017. From the RM million 34 comprises of swimming pool, mini-cinema, overall result, 95% of revenue or RM289 million was game area, gymnasium and dining facilities contributed by IFM segment, and the remaining for 2018 located in the heart of The Hive compound. balance was contributed by Property and Land In addition, our IFM segment also holds Development (PLD) and PMC segments. several key contracts in Rapid Pengerang For the year 2018, our average share price recorded in such as the RM24 million, 39-month 2018 was 58 sen per share which was a direct result Small Medical Facility Services (SMF) of the overall slow-down of the equity market. Despite management and operation contract RM recording a positive PAT in 2017, we have anticipated which is a collaboration with Kumpulan the volatility of our share price as we underwent an Perubatan Johor Group (KPJ Group). overall business transformation in 2017 and 2018. We TURNOVER also understand that we must sustain this profitability before we can win investors’ confidence to come back and invest in our shares. With that in mind, we are committed to fulfilling the expectations of our shareholders which is to improve DBhd’s share price RM304 million SMALL MEDICAL FACILITY to reflect the Group’s future growth and profitability INCREASE 22% potential. million We are anticipating the need for working capital for the Group as we continue to grow and secure more RM24 contract value contracts as well as to launch new projects. The FOR 39 MONTHS Redeemable Convertible Notes (RCN) programme They are the subject matter experts who was initiated in November 2017 to fulfil our cash flow provided the supply of doctors, nurses, requirement for working capital while increasing the medical assistance personnel, medication liquidity and demand for our shares at the same time. and the medical types of equipment. Our Although the share volume increased, there was no existing scope in Pengerang is also enriched immediate support in terms of strong pull-factor that IFM SEGMENT by our Security Management Services enticed investors to acquire the shares in large blocks worth RM26 million, providing security which would help realise the share value. Despite the personnel to ensure the safety and security low price, we managed to utilise internal-generated of over 10,000 construction workers within cash flow from operating activities for the Group’s RM the Rapid Pengerang project compound working capital throughout 2018. Eventually, we made 289 and workers’ camp managed by one of the a cautious decision to terminate the RCN programme contractors. in September 2018 to further minimise dilution impact million revenue to our existing shareholders. for 2018 Another IFM contract currently managed by the Group in 2018 is the contract for cleaning services in Kuala Lumpur
40 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Group Managing Director’s Statement AND
Management Discussion & Analysis (cont’d)
Mechanical Planned Preventive Heating, Ventilation Club House Camp Residence Stadium & Electrical & Corrective & Air Conditioning Management Management Management & (M&E) Maintenance (HVAC) Operations
Food & Beverage Catering Security Small Medical Laundry Housekeeping (F&B) Services Services Facility Management
Cleaning Waste Landscaping Event Cashless Payment Hotel Services Management Work Management System Management
International Airport (KLIA) awarded Forward Looking Statement challenges in the immediate and longer in April 2016. This contract currently term i.e. 10 years. These workshops In 2017, we embarked on a contributes between RM8 million to RM10 enabled us to gather valuable inputs from transformation journey as a Group million revenue per annum. In addition, we our directors, shareholders, financial through the implementation of the also clean and maintain Telekom Malaysia advisers, clients, analysts, financiers and Strategic Restructuring Plan (SRP) with (TM) Annexe buildings, TM Menara various members of the organisation. initiatives aimed at steering us back to Rebung building, PETRONAS Hyperstations profitability. We monitor the initiatives’ Through the findings, we formulated within Kuala Lumpur and Selangor, as well implementation status through monthly specific business approaches which we as several other IFM contracts in Johor Executive Committee (EXCO) meetings termed as SRP-2022 that will guide us including the management and operation which is the highest decision-making level in the years to come. As a start, the SRP- of Larkin Stadium and ground handling after DBhd’s Board of Directors (BOD). The 2022 outlines strategies to push the Group services in Senai International Airport with EXCO focuses on targeted deliverables towards achieving our target PAT of more a total combined revenue of approximately and milestones completion at specific than RM60 million per annum by the year RM40 million per annum. deadlines. As a result, we managed to 2022. Through our SRP-2022, we hope The year 2018 saw an improvement in complete all key initiatives by the end of the Group’s PAT will continue to grow and our balance sheet which is in a stronger 2017 and in turn, broke the Group’s three- exceed RM100 million per annum by the position compared to the full year 2017. year streak of losses with a PAT of RM18 year 2025. The Group has set a target of at Our Earnings Per Share (EPS) grew by 9% million, a testament of our success in least 40% profit contribution from the PLD to 6.01 sen per share as compared to only bringing the Group back to profitability. segment, with the balance generated via 5.48 sen per share in 2017. The increase IFM and PMC segments. Currently, we are in the second phase of was a direct result of higher profits the SRP where we will focus on building The third phase of SRP (after the year recorded in 2018 despite higher weighted the foundation for the Group to continually 2022) shall focus on the overall business average number of ordinary shares of the generate sustainable profits over the expansion of the Group via investment Group in 2018. The increase in ordinary next five years. In 2018, we conducted activities as well as through acquisition shares issued in 2018 was also in direct internal and external workshops aiming to of profitable ventures in both local and proportion to the RCN programme that understand and anticipate all foreseeable foreign countries. The key idea is to first was terminated in September 2018. 41 Establishing Sustainable Growth
Group Managing Director’s Statement AND
Management Discussion & Analysis (cont’d)
Council (MHTC). They quoted a serious shortage in supply of specialist hospitals and support facilities in Malaysia. It only makes sense to explore the opportunities within this niche market by leveraging GROUP PAT TARGET on our expertise in hospital planning and development through our PMC subsidiary.
Sustainable Profit Growth RM million RM million In order to secure a brighter future 100 11 for the Group, we have to select and PER ANNUM BY 2025 70% SHARES IN HTS SOLD TO JCORP IN 2018 practice sustainable course of actions that encourage continuous positive growth. create businesses with sustainable and Thus, we are targeting to launch various Therefore, we took various approaches steady profit which will make a significant scales of mixed development property including continuously expanding our contribution to our future reserves. This projects in anticipation of demand and IFM service offerings, improving the will allow us to select the most profitable supply equilibrium in the property market. effectiveness of our organisation’s design investment in the future; while at the same and function, attaining desired profit level We are not discounting the possibility of time expand our Group organically through for all of our IFM contracts and property increase in healthcare-related properties our existing business segments. projects and streamlining our internal demand such as hospitals and specialists’ corporate structure to be leaner and cost centres throughout the country as Streamlining Our Businesses effective. indicated by the Malaysia Healthcare Travel The year 2018 saw us becoming a leaner Various policies designed to develop organisation as a part of an effort to ensure sustainable growth for the Group.
We are now the 100% indirect shareholder of Metro Parking Management (Philippines) Inc (MPP), the number one parking operator in the country in terms of market share as of May 2018. MPP contributed approximately RM37 million in revenue to the Group in 2018 with an 11% Profit Before Tax margin.
In the same year, we also disposed our 70% stake in Healthcare Technical Services Sdn. Bhd. (HTS) to a subsidiary of JCorp. The decision was based on the consideration that KPJ comprises 95% of HTS client base. With the departure of HTS, it was mutually agreed that we maintain all non-KPJ projects under DPMC’s banner.
STRATEGY AND FUTURE OUTLOOK
We are expecting a shift in the property market within the next few years as a result from market and policy correction activities designed to allow the industry to regrow. HC Duraclean employees cleaning the insides of a low cost carrier plane in Senai Airport
42 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Group Managing Director’s Statement AND
Management Discussion & Analysis (cont’d)
Sustainable Technology-based Profit Growth Solution STRATEGY AND
Talent Strong Business Competencies Alliances FUTURE OUTLOOK
sustainable growth and to guide the plan and further action to address the develop our internal capabilities as system Group were set by the Human Resource shortfall will be triggered. This mechanism integrator and apps developer to deliver Committee (HRC) chaired by the Group guarantees profitability and has resulted in our clients’ future needs. We have created Managing Director. These policies were put sustainable profits for two years in a row a tech-support arm under the Group that in place to promote effective organisation since 2017 for the Group. specialises in development of customised design and function by ensuring the solutions based on clients’ unique needs. In our effort to ensure sustainable profit, adequacy of our human capital resource in we began systematically streamlining each of our organisations. Each employee’s Strong Business Alliances operations to optimise resources and functions and job scope have been capital to generate better margins and The year in review saw the strengthening of streamlined to eliminate costly duplication returns. Aside from HTS, the Group is our offerings and market positioning in IFM of tasks. Considering the fact that we are exploring to dispose of its stake in Metro segments via collaboration or alliance with operating in a labour-dependent industry, Parking (S) Pte LTD (MPS), to concentrate strategic partners. Collaborating with subject it is imperative for us to manage payroll and on the Phillippines which offers higher matter experts in each industry allowed us salaries closely. An oversized organisation growth. Subsequently, in March 2019, the to capitalise on experience and knowledge will hamper positive growth in the long run sale was rescinded after the buyer could sharing on matters such as specific due to direct and indirect labour costs. not fulfil key conditions precedent under certifications and licenses. It also means Another approach that we have taken to the agreement. that we are able to benefit from the good ensure sustainable growth is clear and reputation of our partners who built their constant communication on desired profit Technology-based Solution Provider names through excellent track record of their margin for projects across the Group. We previous projects. The collaborations and As we move into the Fourth Industrial have a policy for the EXCO to assess and alliances allowed us to provide clients with Revolution (IR 4.0), we foresee the need approve all new IFM and PMC contract a one-stop-centre IFM services to manage to equip ourselves with technological bidding or future PLD project viability such their assets and facilities. knowledge in order to provide effective as EBITDA margin and PAT margin. solutions for our clients. Therefore, we need On top of the collaboration to expand our This policy has directly improved the quality to be able to customise our services cater to service offerings, we also partnered with of contracts secured by the Group where each customer’s unique needs. other support industry players to deliver the the agreed targets are closely monitored. best services for our clients. For example, we With the aim to be the preferred one-stop- Should the performance fall below the are collaborating with many local manpower centre IFM solutions provider, we shall benchmark approved by EXCO, mitigation
43 Establishing Sustainable Growth
Group Managing Director’s Statement AND
Management Discussion & Analysis (cont’d)
Industrial floor cleaning is one of the TMR Urusharta provides security personnel who are always ready to provide a many cleaning services that our IFM holistic security services to meet all of security demands of its clients segment offers to its clients supply contractors in Sepang, Selangor who was cancelled following a change in the sustainable talents that build and benefit provided us with over 100 local workers current government’s requirements and not just the company but also the industry each day for the KLIA cleaning contract. in line with the Government’s aspiration as a whole. The majority of our current Via this collaboration, we delivered on our to consolidate the number of agencies manpower are skilled labourers with at requirement to clean the 250,000 sq. ft. under the Ministry of Housing and Local least 15 to 20 years of technical experience airport main terminal area including 5-level Government. who did not apply for professional main terminal building, short-term car On our partnership with Axventure Sdn. certification from related bodies. park, curbsides and loading bays, as well Bhd. (Axventure) for the UiTM Teaching Therefore, we implemented a Group-wide as the 3-level contract piers located after Hospital project in Shah Alam, progress policy to encourage our staff to obtain the immigration screening counters. Our of the construction has reached 50%. professional certification and accreditation partners also took care the transportation Currently, we are in talks with several other for technical skills that will benefit both the and accomodation for these workers. This companies to co-develop various mixed staff and the Group. arrangement is a win-win collaboration as development projects with a total GDV of The policy focuses on giving to our staff we focus on delivering high-quality cleaning more than RM1.2 billion in various states continuous support in terms of experience, service for the gateway of the country. in Malaysia for 2019 onward. additional professional allowance and In 2016, we entered into a 30:70 joint character building as well as the right Talent Competencies venture with Country Garden for a property avenue and training to obtain certification. development project to co-develop our Future advancements in automation and We anticipate a surge in staff-cost due to 63-acre land in Tampoi, Johor Bahru with a artificial intelligence are expected to impact certification and monthly allowances but GDV worth approximately RM3.5 billion. The the Group by necessitating a major revamp this will be offset by the Group’s business target is to construct over 10,000 residential on the work-scope for our manpower at growth and therefore, making it a worthy and commercial units by 2023 and become various levels. The advancements will investment. among the largest residential township in definitely benefit the industry particularly in terms of quality and consistency of The key of our success is to ensure our Johor. services delivered. people are on board and aligned to Group’s Meanwhile, the Projek Perumahan targets. Since 2017, senior management has Realising this, the Group aims to create Penjawat Awam (PPAM) awarded in 2016 been diligent in continually engaging our 44 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Group Managing Director’s Statement AND
Management Discussion & Analysis (cont’d)
Artist impression for UiTM teaching hospital in Puncak Alam
people across all subsidiaries and locations as Executive Vice Chairman in late 2018, for ideas and issues, as well as to share the whose experience and advice benefitted progress of our plans and achievements. me and DBhd greatly. My gratitude also In 2018, we maintained the pace of goes to YB Datuk Md Othman bin Yusof, engagements, whether through meetings, Encik Wan Azman bin Ismail and Puan townhalls, newsletters, and coffee chats, Zainah binti Mustafa, who also stepped to keep our strong momentum going. We down as Directors. I would also like to are humbled by the level of motivation and welcome Encik Azhari bin Abdul Hamid commitment that our people have shown and Puan Vinie Chong Pui Ling as the new in pulling together to collectively achieve members of the Board. I look forward to the Group’s operational and strategic working together in steering DBhd into We provide 5 star quality catering goals. These measures have created better higher profitability. services by our highly trained relationships with our operational teams professional chefs and kitchen staff I am fortunate to have a strong leadership and will stand us in good stead as we forge team who are dynamic and motivated to ahead. steer the company towards sustainable APPRECIATION business profits. We look forward to working together to shape the Group that I would like to extend my gratitude to the is well positioned to deliver profitable Chairman and the Board for their unceasing results, consistent returns and create value guidance, confidence and support. A very to our stakeholders. special appreciation goes to YB Dato’ Daing A Malek bin Daing A Rahaman who retired 45 Establishing Sustainable Growth SUSTAINABILITY STATEMENT
Guided by Bursa Malaysia’s Scope and Boundary Sustainability Reporting This Sustainability Statement encompasses the localities where the Group operates and has a substantial presence especially in the state of Johor, Kuala Lumpur and Selangor relating Guide, we are pleased to to our three core businesses; Property & Land Development (PLD), Integrated Facilities present DBhd’s Sustainability Management (IFM) and Project Management & Consultancy (PMC). This Statement does not cover our overseas and non-core business units. This Statement is for the financial year Statement. ended 31 December 2018.
Embedding Sustainability and Governance The Board of Directors (the Board) of DBhd provides guidance to the Group’s senior In order to establish a sustainable business management on business strategy and overall sustainability and governance through for DBhd, we have incorporated the approved policies and objectives. Through the Board’s governance role and with its ethos and principles of sustainability in guidance, Economic, Environment and Social (EES) sustainability approaches have become our Strategic Restructuring Plan (SRP). guiding objectives for the Group. As a result, EES considerations and practices are being Implemented in late 2016, the SRP seeks to continually integrated in our operations and working culture by the senior management embed Economic, Environment and Social which is constituted as an Executive Committee (EXCO). (EES) sustainability approaches into our the strategy. KEY ROLES OF THE BOARD A Approve policies to safeguard the Group’s sustainable objectives and implementations at EXCO level B Monitor the implementation of the action plans related to all material sustainability matters highlighted by the EXCO
KEY ROLES OF EXCO FOR SUSTAINABILITY
A Analyse and recommend sustainability policies to the Board B Identify, assess, and record operations-related risks which may have direct or indirect impact to the Group’s sustainable objectives Selangor Kuala Lumpur C Implement the action plans to mitigate identified risks which will impact on the Group’s sustainable objectives
BOARD OF SUSTAINABILITY OBJECTIVES Johor DIRECTORS (BOD)
Key Operations Presence
RM EXECUTIVE COMMITTEE (EXCO) Economy Environment Social
Sustainability and Governance in Damansara Realty Berhad
46 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
SUSTAINABILITY STATEMENT (cont’d)
The EXCO members comprise of Group development or by minimising impact to expectations, needs and concerns of every Managing Director (GMD) and Group the environment in the area where we stakeholders affected with what we do and Executive Director (GED), C-levels of DBhd, operate. where we operate. Managing Directors (MDs), Executive The diagram below sets out distinct groups Directors (EDs) and Chief Executive Officers Stakeholder Engagement of stakeholders and examples of how we (CEOs) of our direct subsidiaries as well as As we move into the second phase of our engage them to improve our performance the Division Heads at HQ level. SRP, it is important for our stakeholders to in all areas of the Group’s operations. We be updated with our business objectives. The EXCO is responsible for analysing the believe it is crucial to maintain a close To date, we continuously conduct impact of our current businesses, PLD dialogue with our stakeholders especially engagements with our stakeholders to help projects as well as IFM contracts on the during the post-transformation stage to us improve on our business operations. Group’s sustainability objectives. The EXCO ensure they understand the changes that will then formulate granular level action Our stakeholders extend from employees are taking and the improvement plans that plans with specific targets and milestones to investors to corporate partners, and we continuously do. By doing so, we believe targeted to either maximise the impact of from consumers to mainstream media, that it will help us to improve our financial, our businesses through direct or indirect local authorities and government bodies. social, and economic performances. contribution to local economy and its social The Group is committed to understand the
SHAREHOLDERS & INVESTORS • Annual Report • Annual General Meetings • Extraordinary General Meetings ANALYSTS • Interactions between investors, • One-to-one meetings and investor relations team or conversations • Online communications • Analysts briefing
EMPLOYEES GENERAL PUBLIC • Town hall • Sponsorship for local • Team meetings activities • Employee internal shouts (newsletter) • Small scale CSR activities • Sports tournaments • Annual Report (inter-department and Group level) • Employee mobile application
CONSUMER GROUPS • One-to-one meetings or conversations BUSINESS PARTNERS • Ongoing partnerships and • Events by DBhd collaborations
GOVERNMENT, AUTHORITIES & REGULATORS SUPPLIERS • Briefings and direct • One-to-one meetings meetings • Ongoing partnerships • Filings • Announcements
MAINSTREAM MEDIA CLIENTS • Media briefings (Current & Potential) • Press releases • 24/7 carelines • Media engagement • Surveys • Events • Service offerings information and updates Daily Regularly Quarterly Bi-annually Ad-hoc Annually
Stakeholder Engagement Summary
47 Establishing Sustainable Growth
SUSTAINABILITY STATEMENT (cont’d)
Managing Business Sustainability Risks
RISK MITIGATION
Workforce
The nature of our business, Cost of labour, relevant skills • Make the necessary provisions and plans to manage and especially in the PLD and the and expertise as well as mitigate the impact of rising costs to our bottom line IFM segments, means that we adequate supply of workers • Explore opportunities to further supplement operations rely heavily on human labour so the reliance on human labour is well managed • Look towards technology-based solutions to offer greater efficiency and automate certain processes • Equip our people with relevant skills and knowledge through certification and training programmes and working with joint-venture partners who are able to provide requisite skill sets necessary
Economy and Industry Environment
The economic conditions of Pricing and adequate supply/ • Plan our property development, location and connectivity the country can have an impact demand, challenging market diligently on our business. Of our three conditions and subdued • Address completion risks by working with reliable business segments, the PLD property market, and long partners in construction segment is more susceptible term impact following to economic and industry regulation and policy changes • On a progressive basis, assess our property related sentiments made at the national level developments against the variable criteria including market demand, pricing, timeliness and design in order to ensure that what we ultimately develop goes in line with market demand
Competition
Competition in the IFM More players are moving • Ensure that we have a competitive edge by including segment continues to grow in into this sector to capitalise our ability to demonstrate the management of a wider tandem with the growth of the potential demand, and also variety of facilities related offerings and requirements, facilities management market, over-reliance on a single looking at waste collection and management, as well which showed on estimated customer as working in collaboration with relevant contractors to a 7.9% Compound Annual offer end-to-end IFM services Growth Rate (CAGR) over the • Add and upskill our services moving into the five-star last five years. Frost & Sullivan hospitality management estimates this market size at revenue of up to RM7.43 billion • Disposed our 70% stake in the Healthcare Technical in 2022, from RM4.7 billion in Services (HTS) Sdn. Bhd. with KPJ Group as its main 2017. This is a robust CAGR of client since 1993. With the divestment of HTS, our PMC 9.2% for this period segments is now consolidated under a new subsidiary an aimed to showcase a portfolio of more diverse healthcare-centred brands
48 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
SUSTAINABILITY STATEMENT (cont’d)
Contribution to Pengerang, Johor future job opportunities. This was done Economy, Social and Environment through continuous on-the-job training, seminars, external specialist training and Our strong presence in Pengerang has technical certifications which we provide provided us with the opportunity to Local to them over the span of our contract contribute to the local community in duration with our clients in Johor. Johor. Currently, we have approximately Talents 255 employees hired for the contracts 202 Apart from contributing directly to in Pengerang and out of this number, the income and working skills of the 79% or at least 202 employees are local employees, our presence in Pengerang talents from various districts in Johor also aims to give local vendors and Small including Johor Bahru, Muar, Batu Pahat, and Medium Enterprises (SME) new Pontian and Kota Tinggi. Our HR Policy & business opportunities in our supply chain guideline encourage our IFM segment to requirements. This includes the supply hire local citizen in our operation areas or of food products, kitchen raw materials, at least local manpower from Johor and spare-parts for various mechanical and neighbouring districts to work with the electrical equipment, logistic services and Group on our existing and future contracts. various kitchen supply for our clients. This is to ensure that we are able to Presently, we have a list of more than 35 develop local talents and at the same time, local vendors which supply various items to meet the contracts’ requirements for the the Group at The Hive. In total, the Group best quality of services for our clients. had spent more than RM10 million in consumables cost for 2018 of which almost Local >800Johorean Local more than Employees >35Vendors various items RM174 million Employee combined contract value for services offered in Pengerang Benefits For the year 2018, the Group had spent almost RM14.6 million in staff remuneration and benefits which include medical expenses, term life insurances, accommodations, Employee Provident RM14.6 million Fund (EPF) and other relevant allowances which include medical expenses, term life for our operation in Pengerang. In addition, insurances, accommodations, EPF and other the Group through our subsidiary has also relevant allowances contributed significantly to the personal career growth of local talents employed by the Group in Johor as we consistently train them in the aspects of technical, communication and social skills which would be beneficial for the employees’ We provide a comprehensive cleaning and building maintenance services.
49 Establishing Sustainable Growth
SUSTAINABILITY STATEMENT (cont’d)
Some of the participants during the CSR event – Batu Layar Beach Clean programme
95% were paid to local vendors operated in Johor.
Over the period of 12 months in 2018, the Group had also contributed towards local >280 kg community services which include our waste collected on the beach beach cleaning programme held at Pantai Batu Layar, Pengerang in November 2018. The event had successfully collected over 280kg of combined waste that were on The event was a joint effort between our the beach; making the 3.5km Pantai Batu Group and the Local Authority or Pihak Layar, a cleaner and scenic beach for tourist Berkuasa Tempatan (PBT) of Pengerang. attraction in Johor, thus directly impacting Over 200 participation ranging from of the the local community by enabling them to Group’s employees, local vendors, PBT, improve their economic stature. residents near Pantai Batu Layar and Kota Tinggi Bikers Youth Club took part in this Contribution to Johor youth technical skills initiative. The event was held to support via collaboration with Kolej Kemahiran PBT’s vision in sustaining “Clean Johor Tinggi Mara (KKTM) Ledang on Technical Beach” programme launched by the Chief Vocational Education Training (TVET) Minister of Johor in May 2018. The Group through one of our subsidiaries, As a commemoration of the event, has an MoU since 2017 with Kolej our Group together with the PBT of Kemahiran Tinggi MARA (KKTM) Ledang, Pengerang have also erected a Scenery- Johor to provide an incubator programme Swing strategically placed on the beach for its graduates to gain knowledge and YDP Bukhari bin Abd Rahman (PBT of specifically to support PBT’s tourism experience in biomedical supply and Pengerang) officiating the CSR event with Ts. initiative. services industry. Graduates under this Brian Iskandar bin Zulkarim (Group Managing Director, DBhd). 50 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
SUSTAINABILITY STATEMENT (cont’d)
Contribution towards developing more Technology experts in Malaysia via certification of Technologist (Ts.) by Malaysia Board of Technologist (MBOT).
The year 2018 saw three of our employees receiving accreditation as MBOT’s Technologist (Ts.) including our Group Managing Director (GMD) Brian Iskandar bin Zulkarim; our Group Chief Operating Officer (GCOO) Yahaya bin Hassan; and the CEO of our subsidiary Damansara Technology Sdn. Bhd.; Zahiruddin Tohir. These individuals have either directly or indirectly contributed to Malaysia’s technology enhancement in the past 15 years of their professional careers.
Our GMD, Ts. Brian Iskandar bin Zulkarim spoke at the Industrial Revolution 4.0 Conference organised by Universiti Utara Malaysia (UUM) in May 2018 attended by Elman bin Mustafa El Bakri featured in a Berita Harian newspaper dated 10 January 2019 over 120 industry leaders, international and local academic practitioners as well programme were trained by the personnel from DPMC in preparing them to serve the as students from both local and overseas industry as experts in medical equipment supply and maintenance services. Over the years, academic institutions. KKTM Ledang has produced batches of graduates that are well trained in the preventive & corrective maintenance services for biomedical equipment. Since then, the Group has Among the key points delivered by the GMD incubated more than two dozen graduates who had received job offers as biomedical in the conference was on the importance engineers with healthcare operators and medical equipment suppliers across the country. of companies adapting to technological advancement in order to stay relevant in the Internally, we are also proud of the achievements of our own people, in particular, Elman industry. In the conference, Ts. Brian also bin Mustafa El Bakri, one of the Executive Director of DPMC. On the education front, other shared his vision and mission on how a public than him being appointed as an Adjunct Professor with University Malaya, he has also been listed company such as DBhd plans to remain requested to produce several biomedical related research papers, and in affiliation with the relevant in the era of Fourth Industrial institution, conducted lectures and mentorship programmes for undergraduate students Revolution (IR 4.0), where the real value lies and taught the Biomedical Department staff. We have also received several appointments within big data analytics and how a business as Industrial Consultants (IC) and Industrial Advisory Panel (IAP) from renowned local entity such as DBhd can capitalise on data universities including Universiti Majlis Amanah Rakyat (UniMARA), Cyberjaya University to further enhance service offerings to our College of Medical Science (CUCMS) and Universiti Kuala Lumpur (UniKL) which require us clients. to provide our insights and knowledge of the industry to undergraduate students from these academic institutions as their mentors. This participation had allowed us to share not just our The invaluable sharing session by our GMD years of experience in technical aspects of the business but also to help them cultivate the stated that in order for a company to stay development of soft skills required for the industry. relevant in meeting the challenges of the future, it is imperative for the company to These appointments & collaborations have solidified our position as the referral point in the evolve with technologies such as artificial biomedical industry in Malaysia and the Group is committed to continuously provide our intelligence (AI) and big data analytics to services in nurturing biomedical services experts in the country. improve the quality of service rendered to its respective clients.
51 Establishing Sustainable Growth
SUSTAINABILITY STATEMENT (cont’d)
Workforce Statistics The Human Resource Committee (HRC) chaired by the GMD looks at balancing the right mix of people to ensure that the organisation is not bloated. Accordingly, we have streamlined each employee’s functions and job-scope to ensure they are fit-for-purpose and eliminate costly duplication of tasks. Executive Female 22% 36%
Title Gender Distribution Distribution Within Within the Group the Group
Non- Male Executive Total Workforce 64% 1,481 (our most valuable asset) 78% Employees Development Programme As we are in a manpower dependent business, we would need to ensure that we hone our employees with specific skills sets to serve our clients’ niche needs. Predominantly in the IFM segment, as we innovate our offerings, we want to ensure that our people are fit-for-purpose in the roles that are progressive to market needs. Towards that end, we envisaged training needs that helped our core management to enhance their leadership skills, and the relevant talents to improve their specialist skills. Here are some of the trainings that our team underwent during the year in review:
COMPANY TRAINING/COURSE TITLE DBhd Seminar on Being A Registered Property Manager DBhd Qualified Auditor Program DBhd MAICSA Annual Conference 2018 :- Forging Forward - New Dimensions DBhd Seminar on Building Information Modelling (BIM) & Building Energy Quotatient (BEQ) DBhd Bursa Malaysia Corporate Governance Guide 3rd Edition : Moving From Aspiration to Actualisation DBhd Joint Courses on Alternative Dispute Resolution for Practitioners DBhd Energy Management System DBhd Policy to Consulting Workshop for CIA DBhd GBI Professional Series 2018 DBhd MIPFM Conference 2018 ‘Bridging PM and FM’ DBhd Towards Net Zero Energy Building DBhd Hazard Indentification, Risk Assessment and Control Engineering DBhd Malaysia Business Reporting System (MBRS) TMR TM Safety Passport TMR Safety and Health Officer Course TMR Basic First Aid, CPR & AED TMR LC Services Sdn. Bhd Basic Occupational, First Aid, CPR & AED Training (TMRLC) TMRLC Food Handling Training TMRLC Authorised Gas Tester Entry Supervisor for Confined Space (AESP) DBhd Negotiation Skills Training by the Group Managing Director of DBhd
52 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
SUSTAINABILITY STATEMENT (cont’d)
COMPANY TRAINING/COURSE TITLE TMRLC Food Handling Training TMRLC Program Profesionalisme Eksekutif Halal Negeri Johor Siri 2 TMRLC Oil and Gas Safety Passport TMRLC Course For Certified Environmental Professional In Scheduled Waste Management (CePSWaM) TMRLC Fire Fighting TMRLC Energy Conservation Training Program TMRLC Food Handling Training TMRLC Authorised Gas Tester Entry Supervisor (AGTES) TMRLC Working at Height TMRLC MBAM Seminar on Occupational Safety & Health and Workshop on Construction Accidents Investigation TMRLC Authorised Gas Tester Entry Supervisor (AGTES)
More than More than More than 803 RM87,393 400 Training Hours Invested on Trainings Employees Trained
Currently, 63% of our workforce are skilled labour with at least 15 to 30 years of technical experience. As we move in the direction of adopting new solutions and upgrading our services through tech-based innovations, we have instituted a Group-wide policy to get our people the necessary professional certifications from relevant certifying bodies. Presently, the Group’s total number of employees with professional technical certification is as follows:
NO. EMPLOYEES DEVELOPMENT PROGRAMME (EDP) PROFESSIONAL CERTIFICATION STAFF CERTIFIED 1 Technologist (Ts.) MBOT 3 2 Professional Engineer (Ir.) 1 3 Registered Electrical Energy Manager (REEM) 1 4 Safety & Health Officer (SHO) 2 5 Chargeman A1/A0 5 6 Chargeman A4 3 7 Chargeman B0 7 8 Wireman PW4 5
Summary table of the Group’s total number of staff with professional technical certification.
Over the next few years, will continue to encourage our employees to obtain various professional certification and accreditation as part of our efforts to become the preferred solutions provider for our clients. The Group is committed to managing our resources productively to enable positive and sustainable impact to the community we serve. This effort is geared towards expanding local stakeholders’ economy and income stream, as well as enhancing the quality of living and social achievements of direct members of the community without compromising existing environment and living ecosystem within the vicinity of our business operations.
53
UPHOLDING OPERATIONAL EXCELLENCE
Empowering broad participation in decision- making built on a culture that promotes integrity, accountability, responsibility, fair-mindedness and transparency. We apply a disciplined approach in managing the effectiveness and efficiency of our administration, ensuring that our businesses are well-managed to improve performance and achieve the Group goals collectively and holistically.
CHAPTER 03 | Corporate Governance
56 Corporate Governance Overview Statement 59 Audit Committee Report 64 Statement on Risk Management and Internal Control 72 Statement on Directors’ Responsibility 73 Recurrent Related Party Transactions 75 Additional Compliance Information Establishing Sustainable Growth CORPORATE GOVERNANCE OVERVIEW STATEMENT
DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE
The Board of DBhd wishes to present this statement to its shareholders and stakeholders with an overview of DBhd’s application of the Malaysian Code on Corporate Governance (MCCG) practices for financial year ended 31 December 2018.
The contextual approach of how the Company applied each of the MCCG’s practices includes its explanations and alternative practices for any departure of the MCCG practices in the Company should be read together with the Corporate Governance (CG) Report of DBhd, which accompanies this annual report and published at our corporate website at www.dbhd.com.my.
The Board recognises the importance of adopting good corporate governance in its efforts to continue managing the business and affairs of the Company consistent with its sustainability plan by promoting business prosperity and corporate accountability.
As such, the Board fully supports all 32 practices as set out in the MCCG, by applying the best corporate governance standard through the Company’s structures, systems, processes and development of a corporate governance culture and environment, by implementing almost all of the practices in substance to achieve the intended outcomes of building and supporting a strong corporate governance culture throughout the Company.
Further, the Board has continuously reviewed, and where appropriate, has taken the necessary steps to promote thoughtful application of good corporate governance practices as well as to provide a fair and meaningful disclosure on the application of the corporate governance practices by the Group.
APPLICATION OF THE PRINCIPLES AS SET OUT IN THE MCCG
Principle A – Board Leadership and Effectiveness
The Board Charter has been revised to align with the spirit and the intended outcome of the MCCG, in the following areas: i. Separation of positions of Chairman and CEO; ii. Responsibilities of the Chairman; iii. Board composition to have at least half of Independent and Non-Executive Directors (INED); iv. Duties and responsibilities of Board, Board Committees, individual directors and CEO; v. Gender Diversity Policy; and vi. Board Meeting Administration.
The revised Board Charter is available in our corporate website at www.dbhd.com.
In addition, the Board has put in place a succession framework to provide for an orderly succession of Board and senior management in accordance with the corporate governance practices, to ensure necessary resources are in place within the Group to achieve the Group’s business objectives and strategies.
The Board is responsible to plan the strategic direction and development of the Group consistent with the best practices as recommended by the MCCG. In discharging the Board’s stewardship responsibilities, the Group’s Executive Directors, comprising of Group Managing Director and Group Executive Director are responsible in planning and implementing operational and corporate decisions. Alternatively,
56 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
CORPORATE GOVERNANCE
Overview Statement (cont’d) the Non-Executive and Independent Directors have to ensure corporate accountability by providing independent and unbiased opinions, advices and judgements as well as check and balance to the executive decision made in order to secure the minority shareholders’ interest in the Company.
The current composition of the Board comprises of seven (7) directors, of whom five (5) are Independent Non-Executive Directors, one (1) Group Managing Director and one (1) Group Executive Director. This composition complies with the best practice of having at least 50% representation of independent directors.
The Board, in ensuring the independency of the Independent directors, had emphasised in its Board Charter that the tenure of the independent directors of the Company does not exceed a cumulative term limit of nine (9) years and in the event the Company wishes to retain a particular Independent Director, it must be approved by the Shareholders at its Annual General Meeting (AGM). In view of the above, Puan Zainah binti Mustafa, who had served the Company for 14 years as the Senior Independent Non-Executive Director, had decided not to seek for re-appointment and accordingly, retired at the 56th AGM of the Company held on 27 June 2018.
The Board has established a gender policy to have at least one female director of which the current Board’s composition has already met such gender policy. The Board also recognises the importance of gender policy in senior management and the current senior management which comprises of one (1) woman, also met the Board’s target of at least 12.5% women’s participation.
In complying with good practice of diversity, the Board emphasizes on the diversity of the ethnicity on the composition of its Board. Puan Vinie Chong Pui Ling was on board on 1 July 2018 in place of Puan Zainah binti Mustafa whom has retired during the 56th AGM of the Company. The appointment of Puan Vinie reflects the strong and persistent effort of DBhd in complying with the good governance practice.
To provide guidance on acceptable behavior to all directors, management and employees in operating and managing the Group’s businesses and affairs, the Code of Conduct and Ethics has been established by the Board. The Code of Conduct and Ethics has been supported by other policies which include whistleblowing policy and corporate disclosure policy and were accordingly published on the Company’s website.
The Board via its Board Remuneration and Nomination Committee (BNRC) is responsible to review and assess annually the effectiveness of the Board as a whole and the individual directors as recommended by the MCCG. The annual assessment is done based on the criteria such as competency, expected contribution and diversity representation. The evaluation for the financial year 2018 were carried out and assisted by the Company Secretary by using questionnaires as recommended by the MCCG’s best practices. The annual performance evaluations include: i. Directors’ and Key Officers’ Evaluation ii. Board and Board Committees Evaluation iii. Self and Peer Evaluation for Board Audit Committees’ Members
Further duties of BNRC are stipulated in its Terms of Reference which has been published on the Company’s website
All directors of the Company are expected to discharge their fiduciary duties in determining the best objectives, vision and mission of the Company for the benefits and interest of the stakeholders. Hence, the Directors are required to equip themselves with knowledge by attending relevant trainings organised by the Company during the financial year 2018, which includes the Mandatory Accreditation Programme (MAP) by Bursa Malaysia for the newly appointed directors.
Furthermore, the Directors’ site visit was also held to give Directors a better understanding on the Group’s business operations as well as to enhance the awareness on any risk associated with the business. The site visit also empowered the Board to have an effective channel of communication and interaction with the Company’s Management in regard to the improvements required for the business operations.
The Board is responsible to attract and retain the right talent in the Board’s composition and senior management to propel the Company’s long-term objectives by determining the remuneration of directors and senior management, which taking into account the demands, complexities and performance of the Group as well as knowledge, skills and experience required.
Practice 7.1 of the Corporate Governance Report highlighted on the commensurate remuneration awarded to the Directors’ of the Company that are based on the individual performance of the Directors by disclosing it publicly on the named basis. Nevertheless, the Board has departed Practice 7.2 by only disclosing the top five senior management’s remuneration in bands of RM100,000 instead of RM50,000 as recommended by the MCCG. The Board chooses a more general alternative disclosure of the senior management’s remuneration in order to retain the harmonized environment among the employees of the Company and to protect the confidentiality of the information. The Company’s ability to retain suitable and talented senior management is one of the Group’s strengths in its succession planning. 57 Establishing Sustainable Growth
CORPORATE GOVERNANCE
Overview Statement (cont’d)
Principle B – Effective Audit and Risk Management
The Board has established an effective risk management and internal control framework to safeguard the Group’s business interests from risks events that may impede the achievements of its business strategies and growth opportunities besides than providing reasonable assurance to all stakeholders that internal controls are effective.
The Board conducts robust assessments of the principal risks faced by the Group by implementing a Risk Management framework to identify, assess, monitor, report and mitigate risks impacting the Group’s business and supporting activities in accordance with the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) Internal Control-Integrated Framework.
In upholding the independency and effectiveness of the Board Audit Committee (BAC), the Chairman of the BAC and the Chairman of the Board are two different persons, in which the BAC is chaired by an independent non-executive director who possesses the literacy on financial knowledge and wide range of the necessary skills in discharging their fiduciary duties.
The BAC which assesses the suitability, objectivity and independence of the external auditors, also provides an independent assessment on the adequacy, efficiency and effectiveness of the internal control systems to manage the risk exposures of the Group’s business.
The Terms of Reference of the BAC has also been revised to take cognizance of the new MCCG practices and is published in our corporate website at www.dbhd.com.my
Principle C – Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders
IIn the effort to encourage the media and analyst engagement, the Management of DBhd has conducted one (1) media and analyst briefing on the Group Corporate and Business Strategies to update the investor community as well as has issued 13 press statements in conjunction with the announcements of material information under the Company’s corporate disclosure policies. The intention of releasing press statements by the Company was not mainly to promote the marketing plan of the Company but to increase other stakeholders’ engagement. The shareholders of the Company will be updated with the latest progress and development of the Group’s business and affairs through the release of the press statements.
During the financial year under review, the Company has complied with the MCCG’s best practices by issuing the notice of its 56th AGM to the shareholders at least 28 days prior to the AGM. The Chairman of the Board chaired the 56th AGM in an orderly manner and allowed the shareholders and the proxies with the opportunity to speak at the meeting. The Group Chief Financial Officer also presented the financial position of the Company and the senior management of the Company were also present to respond to any enquiries from the shareholders.
Moving forward, to ensure the highest level of Corporate Governance standard is consistently adhered by the Company, all Directors will be attending this year’s AGM to provide opportunities for the shareholders to effectively engage with the directors.
COMPLIANCE WITH THE MCCG
The Board is of the opinion that the Group had complied with the spirit and objectives of the MCCG. Even though, there are departures of several practices as recommended in the MCCG, the Board believes that there are justifiable reasons for such and that the overall corporate governance of the Group is not in any way compromised. Nevertheless, DBhd will continue to strengthen its governance practices to safeguard the best interest of its shareholders and other stakeholders.
This Corporate Governance Overview Statement was approved by the Board on 19 March 2019.
58 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD AUDIT COMMITTEE report
COMPOSITION OF MEMBERS
The composition of the BAC is as follows:
1. Shahrizam bin A Shukor (Chairman - Independent Non-Executive Director) (appointed as Chairman of BAC on 1 July 2018) 2. Haji Abdullah bin Md. Yusof (Independent Non-Executive Director) 3. Vinie Chong Pui Ling (Independent Non-Executive Director) (Appointed on 1 July 2018) 4. Zainah binti Mustafa (Chairman - Senior Independent Non-Executive Director) (retired on 27 June 2018)
This meets the requirements of paragraph 15.09(1)(a) and (b) of Bursa Securities’ MMLR.
BAC Chairman, Shahrizam A Shukor, is an Associate Member of Certified Practising Accounting Australia and a Member of the Malaysian Institute of Accounting (MIA). Accordingly, DBhd complies with paragraph 15.09(1)(c)(ii) and 15.10 of MMLR.
MEETINGS
BAC met five (5) times during the year under review. The Directors holding executive positions, DBhd’s Internal Auditors, representatives of the DBhd’s External Auditors and members of the Management were invited to the Audit Committee Meetings (ACM).
The attendance of each BAC Member during the financial year was as follows:
MEMBERS 12/02/18 12/03/18 14/05/18 14/08/18 13/11/18 (87TH ACM) (SPECIAL ACM) (88TH ACM) (89TH ACM) (90TH ACM)
Shahrizam bin A Shukor Yes Yes Yes Yes Yes
Haji Abdullah bin Md. Yusof Yes Yes Yes Yes Yes
Vinie Chong Pui Ling Yes Yes
Zainah binti Mustafa Yes Yes Yes Retired
TERMS OF REFERENCE
Objectives
The objectives of the BAC are as follows:
1. To assist the Board in discharging its responsibilities relating to the Group and DBhd’s management of principal risks, internal controls, corporate governance, financial reporting and compliance of statutory and legal requirements. 2. To provide, by way of regular meetings, a line of communication between the Board, Senior Management and External Auditors. 3. To provide emphasis on the internal audit functions by increasing the objectivity and independence of the Internal Auditors and provide a forum for discussion that is independent of the Management. 4. To review the quality of the audits conducted by the Internal and External Auditors of DBhd.
59 Establishing Sustainable Growth
AUDIT COMMITTEE REPORT (cont’d)
Authorities
BAC is authorised by the Board:
1. To investigate any matter within its Terms of Reference. 2. To have full, free and unrestricted access to any information, records, properties and personnel of the Company and any other companies within the Group. 3. To have direct communication channels with the External Auditors and person(s) carrying out the internal audit functions or activities. 4. To obtain independent professional or other advice. 5. To convene meetings with the External Auditors, without the presence of the Management (executive members) at least once a year.
Duties and Responsibilities
Duties and responsibilities of the BAC are as follows:
1. To review with the Management and recommend acceptance or otherwise of major accounting policies, principles and practices especially on management accounting, financial reporting, risk management and business practices. 2. To review the Group’s quarterly and year-end financial statements before submission to the Board. 3. To consider the appointment of the External Auditors, the terms of reference of their appointment, the audit fee and any proposal of their resignation as auditors. 4. To review with the External Auditors, the nature and scope of their audit plans and their audit reports. 5. To review the External Auditor’s Management Letter and discuss any matter that the External Auditors may wish to raise in the absence of Management, where necessary. 6. To review the Internal Audit Charter and the yearly audit plan and budget to ensure that the internal audit functions are adequately resourced to undertake its functions and have appropriate standing in the Group. 7. To review the internal audit functions and the result of the internal audit programs or investigations undertaken and whether or not Management has taken appropriate actions on the recommendations made by the Internal Auditors. 8. To review any related party transactions and conflict of interest situation that may arise within DBhd or Group including any transactions, procedures or courses of conduct that raise questions of Management’s integrity. 9. To review inspection and examination reports issued by any regulatory authority and to ensure prompt and appropriate actions are taken in respect of any findings. 10. To receive reports and deliberate on the implementation of the risk-control process and the progress of risk management activities undertaken by the Group. 11. To perform any other functions as authorised by the Board.
60 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
AUDIT COMMITTEE REPORT (cont’d)
Summary of Activities
The BAC’s activities during 2018 comprised the following:
A) Financial Reporting
1. BAC reviewed the financial statements and the Quarterly Results as presented by GCFO in accordance with the approved accounting standards adopted by the Malaysian Financial Reporting Standard (MFRS).
2. GCFO had presented to the BAC, on quarterly meetings that:
i. Appropriate accounting policies had been consistently adopted and applied; ii. The going concern basis applied in the Annual Financial Statements and Consolidated Financial Statements was appropriate; iii. Prudent judgements and reasonable estimates had been made in accordance with the requirements set out in the MFRSs; iv. Adequate processes and controls were in place for effective and efficient financial reporting and disclosures under the MFRSs; v. The Annual Financial Statements and Quarterly Consolidated Financial Statements did not contain material misstatements and gave a true and fair view of the financial position of the Group and the respective companies within the Group for the financial year 2018; vi. Quarterly results were reviewed by the External Auditors, Messrs. Jamal, Amin & Partners (JAP) prior to the announcement to Bursa Securities.
3. Significant issues reviewed by the BAC during the financial year were as follows:
i. Compliance with MFRS ii. Compliance with statutory requirements including Appendix 9B of the MMLR iii. Budget and expenditure iv. Unexpected expenses v. Financial performance vi. Audit findings reports vii. Statutory requirements (EPF, SOCSO & TAX)
4. The BAC was satisfied with the issues reviewed.
B) Internal Audit Functions
1. The Internal Auditors ultimately report to the BAC and administratively to GMD. They have carried out their internal audit functions for the Group independently with impartiality, proficiency and due professional care.
2. The core function of internal audit is to perform an independent appraisal of the Group’s activities as a service to the Management. The internal audit functions play an important role in helping Management to establish and maintain the best possible internal control environment within the Group. The sound internal control environment would ensure the Group’s compliance with legal and regulatory requirements, safeguarding of assets, adequacy of records, prevention or early detection of frauds, material errors and irregularities as well as efficiency of operations.
61 Establishing Sustainable Growth
AUDIT COMMITTEE REPORT (cont’d)
Summary of Activities (cont’d)
The BAC’s activities during 2018 comprised the following: (cont’d)
B) Internal Audit Functions (cont’d)
3. The Internal Auditors had ensured that:
i. The internal audit plans and programs were appropriately developed to commensurate with the Group’s activities and appropriate focus and resources were allocated; ii. The internal audit plans and programs were continuously reviewed and where necessary were adjusted accordingly to reflect any significant changes in the Group’s business environment, structure, activities, risk exposures or systems; and iii. The activities of internal audit are consistent with the long term goals of the Group and are in line with its internal controls, policies and procedures
4. The BAC met the Internal Auditors quarterly and the following topics were discussed:
i. Internal audit reports ii. Follow up audit reports iii. Unresolved audit findings
5. The Internal Auditors conducted a risk based approach during the development of the annual audit plan. The coverage of auditable areas takes into consideration the functions of governance, review of controls and compliance, operational risks, audit history and request by the top management or the BAC that is aligned to the Company’s strategic objectives.
6. The scope of internal audit covers the audits of all of the Group’s operational units, including its subsidiary companies based on the approved 2018’s audit plan. Among the key areas covered during the financial year were: i. Revenue Recognition ii. Billings iii. Debtors’ and Creditors’ Ageing iv. Bank Reconciliation v. Inventory Management vi. Operations and Maintenance vii. Planning viii. Project Management ix. Procurement x. Asset Management xi. Financial Management xii. Human Resource Management xiii. Contracts xiv. Legal and Governmental regulations xv. SOPs
7. The Internal Auditors presented audit reports that contain purpose, scope and results of the audit, including findings, conclusions and recommendations, management response and corrective actions in areas with significant risks and internal control deficiencies to BAC on a quarterly basis. During the year, 40 audit activities (including 32 audits and 8 follow-ups) were undertaken throughout the Group and 40 audit reports issued.
62 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
AUDIT COMMITTEE REPORT (cont’d)
Summary of Activities (cont’d)
The BAC’s activities during 2018 comprised of the following: (cont’d)
B) Internal Audit Functions (cont’d)
8. The Internal audit findings in 2018 continued to reflect a moderate internal control system. Internal audit reports provide a formal means of communicating audit results and recommended actions to the Management and BAC. Audit reports provide the basis for the BAC to highlight significant weaknesses and the Management’s proposed remedial measures to the Board. The Internal Auditors’ recommendations are for reducing risks, strengthening internal controls and correcting errors. The BAC was satisfied with the Internal Auditors’ review and instructed the Management to take all necessary actions to resolve the issues raised by Internal Auditors.
9. As at 31 December 2018, IAD had a total of five auditors, comprising staff from various backgrounds. The total costs incurred during the financial year for the internal audit functions for the Group level was approximately RM295,378 as compared to RM266,813 in 2017.
C) External Audit
1. On 12 March 2018 and 13 November 2018, the BAC had private meetings with the External Auditors without the presence of the GMD, Management and Internal Auditors. The BAC questioned about Management’s cooperation with the External Auditors, their sharing of information and the proficiency and adequacy of resources in financial reporting functions with applicable MFRSs. The BAC Chairman also requested the External Auditors to inform the BAC at any time should they be aware of incidents or matters in the course of their audits or reviews that needed the BAC’s attention.
2. Policies established and adopted by the Board for the BAC to assess suitability and independence of External Auditors. On 19 February 2019, the BAC performed an annual assessment on lead audit engagement partner and engagement team which covered their performance and quality of audit, communications with the BAC and Bursa Malaysia, and External Auditor’s independence, objectivity and professionalism.
3. Assessment questionnaires were used as a tool to obtain input from DBhd’s personnel who had considerable contact with the external audit team throughout the year. A five-point scale was used to evaluate the External Auditors’ performance which encompassed on their ability to provide advice, suggestions or clarifications pertaining to the presentation of financial statements, ability to provide realistic analysis of issues using technical knowledge and independent judgment, and maintain active engagement, via both verbal and written communication during the audit process, as well as their responsiveness to issues.
4. The BAC was satisfied with the suitability of JAP, based on the quality of services and sufficiency of resources they provided to the Group. The BAC also acknowledged the communication and interaction with the lead audit engagement partner and engagement team, which revealed their independence, objectivity and professionalism.
5. Result of the performance assessment of JAP for 2018 supports the BAC’s recommendation to the Board for approval of the appointment of JAP as External Auditors for the financial year ending 31 December 2019.
6. The Board at its meeting approved the BAC’s recommendation to appoint JAP, subject to the shareholders’ approval being sought at the forthcoming 57th AGM on the appointment of JAP as External Auditors of DBhd for the financial year ending 31 December 2019.
7. On 31 December 2018, the GCFO reported that audit fees incurred in 2018 amounted to RM433,000 to the External Auditors for the financial year 2018. The GCFO also sought the BAC’s approval for the proposed audit services to be provided by the External Auditors in the same year. There are no non-audit service fees incurred during the financial year.
8. JAP had provided a written assurance on 19 March 2019 to the BAC that, in accordance with the terms of all relevant professional and regulatory requirements, they had been independent throughout the audit engagement for 2018.
63 Establishing Sustainable Growth STATEMENT ON RISK MANGEMENT AND INTERNAL CONTROL
This Statement on Risk Management & Internal Control (Statement) is made pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) which requires the Board of Directors of listed companies to include in their annual report, a “statement about the state of internal control of the listed issuer as a group”. It outlines the nature and scope of risk management and internal control within DBhd Group during the financial year under review.
RESPONSIBILITY & ACCOUNTABILITY
The Board
The Board acknowledges its overall responsibility in the establishment and oversight of the Group’s risk management framework and internal control systems that are designed to manage the Group’s risks within an acceptable risk appetite as set by the Board and Management aiming to achieve the Group’s goals and objectives in generating potential returns to shareholders. The Board also continuously reviews the effectiveness, adequacy and integrity of the framework and systems.
The Board has received assurance from the GMD and GCFO that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects.
The Board confirms that there is an ongoing process of identifying, evaluating and managing all significant risks faced by the Group throughout the year and up to the date of approval of the Annual Report and Financial Statement. The Group includes material joint ventures and associated companies.
Previously, the Group formed an Enterprise Risk Management (ERM) Committee, which consisted of the Management, and its risk coordinators and was held every quarter in 2017. This is done explicitly to establish, formulate, propose, and monitor a sound ERM programme and to ensure that all principal risks are identified, and that necessary internal systems are in place to control them. These are done in line with best practice provisions within the Malaysian Code on Corporate Governance. The Board Risk Management Committee (BRMC) was established on the 23 of November 2016 to further provide oversight on risk management matters relating to the activities within the Group and ensure that there is prudent risk management over the Group’s businesses and operations. The following Board committees have been set up to promote transparency, governance and accountability:
64 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Statement on risk management
AND internal control (cont’d)
THE BOARD COMMITTEES
Audit Committee
Risk Nomination & Management Remuneration Committee Committee
Tender Committee
The Management
The Management acknowledges its responsibility in ensuring Risk Management is adequately carried out, by implementing the processes to identify, evaluate, monitor and report on risks and the effectiveness of the internal control systems, taking appropriate and timely corrective actions as required. It assures the Board that the Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects, based on the risk management framework adopted by the Group. The Management implements the necessary processes to:
• identify and analyse the risk appetites relevant to the business;
• design, implement and monitor the risk management framework in accordance with the Group’s strategies; and
• identify changes to risks or emerging risks, following which it takes appropriate actions and promptly brings these to the attention of the Board.
The Management has set up the following committees to monitor, direct and provide an on-going assessment to ensure that the Group’s businesses follow its business plans and established policies:
Group Management Group Executive Group Human Procurement Committee Resource Committee Committee 65 Establishing Sustainable Growth
Statement on risk management
AND internal control (cont’d)
RISK MANAGEMENT FRAMEWORK
The Board has established a risk management framework for the Group by adopting the Risk Management Process. This framework designed by the Company’s Directors, Management and other personnel, is a process to identify, evaluate, monitor and manage principal risks that will provide reasonable assurance regarding the achievement of the following objectives: -
Compliance 3 with applicable Effectiveness laws and and efficiency regulations 1 of operations
Reliability of financial Safeguarding 2 reporting of the Group’s 4 assets
Risk Management Objectives
To properly manage risks, the Board recognises the fact that an appropriate and sound system of internal control should be in place, with the adoption of the Committee of Sponsoring Organisations of the Treadway Commission’s (COSO) Internal Control – Integrated Framework. which comprises the following five (5) fundamental components that include Control Environment, Risk Assessment, Control Activity, Information and Communication and Monitoring.
66 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Statement on risk management
AND internal control (cont’d)
RISK MANAGEMENT PROCESS
The Group’s Risk Management five step process describes the processes involved in the risk assessment and risk treatment within the context of external and internal environments. This process is applied throughout the Group, by identifying any risks that prevent the achievement of objectives are and these risks are then assessed, mitigated, reviewed and communicated to the Board, Management and relevant stakeholders.
This comprehensive risk assessment through the established process enabled risk profiles to be developed by reflecting the key risks specific to all divisions, departments and subsidiaries in the Group.
The below diagram describes the five step process: Compliance 3 with applicable Effectiveness laws and and efficiency regulations 1 of operations Self-assessment Risk Owner Reliability of financial Safeguarding 2 reporting of the Group’s 4 assets
Plan Risk Owner 1. Self-assessment Risk Owner MONITOR PERFORMANCE
5. 2. IMPLEMENT IDENTIFY RISK MITIGATION Risk STRATEGY Management Process
4. 3. PLAN RESPONSE ASSESS RISK STRATEGY
Avoid Mitigate Accept Impact Likelihood
Share
67 Establishing Sustainable Growth
Statement on risk management
AND internal control (cont’d)
The below diagram describes the five-step process:
CONTROL RISK ASSESSMENT & CONTROL ACTIVITIES INFORMATION & SYSTEM OF INTERNAL ENVIRONMENT EVALUATION COMMUNICATION CONTROL PROCESS
• Formulated a Risk • A structured risk- • Comprehensive • The Group has well • The Group recognises Management control process has reports provided by defined and clear line that internal control Framework to been established the Management to of communication systems need to guide personnel the Board within the Group’s be continuosly in identifiying, • Risk issues are organisational monitored assessing, managing updated and • Regular Management structure and reporting the reviewed by the meetings to obtain • This is accomplished risks Management, ERM feedback on the • The structure through ongoing Committee and activities undertaken ensure that the monitoring activities, • Established and Internal Auditors by the operating/ Board receives separate evaluations distributed the business units timely relevant and or a combination of Group’s Internal • Risk assessment to rectify any reliable reports on both Policy and Procedures is performend shortcomings business activities, on Property Matters in determinig progress and related • The Management and Construction the impact and • Visits to operating/ information for provides regular Management to all probability of business units by informed decision- and comprehensive personnel levels occurence of the risks members of the making reports to the Board Board and senior covering financial • The Group adopts • The comparison of management • The Group performance and key and practices the estimated risks levels has effective business indicators ethical code of against established • Regular internal audit communication conduct as guided by criteria and deciding site visits channels, through • The Internal Auditors the HR policies and if the risk is within reports, briefings, reports to the Board procedures tolerable limits was • Regular meetings, Audit Committee and used to evaluate the reconcilliations discussions, internal administratively to risks memorandum the GMD • Efforts to safeguard and website, to the Company’s assets communicate and • The Audit Committee disseminate relevant will determine • Segregation of duties and important whether the and physial security information on a Management has of assets timely basis taken the actions on the recommendations • Risk Control Reports made by the Internal together with action Auditors plans submitted to the Risk Management Coordinator
68 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Statement on risk management
AND internal control (cont’d)
RISK MONITORING & RESULT FOR THE YEAR 2018
In 2018, the Group monitored the risks using the risk tools to measure respective risk profile matrix scoring and prioritisation. This matrix consists of a number of risk profiles including its severity and probability and prioritises the probability of the risk occurrence against its magnitude of impact.
Identification for DBhd Group Risk Risk Prioritisation
Key Risk Indicators (KRI) Identified Low Severity High Severity High Probability High Probability 3 - 8 20 - 25 4 1 2 1
Low Severity High Severity Low Probability Low Probability Damansara Realty Damansara Healthcare TMR 1 - 4 (L) 9 - 16 Berhad Property Technical Services Urusharta Probability of Occurrence Probability
Magnitude of Severity
Note: • The Risk Prioritisation Matrix as presented to the BRMC No.1/2017 on February. (Source: Corporate Planning and Transformation Division (CPT), Feb 2017) • Risk priority is given to those with high severity and probability score. • For 2018, a total of eight KRI were identified with 21 Action Plans.
Source: The identification of eight KRI as presented during the Board Risk Management Committee (BRMC) in May 2018.
69 Establishing Sustainable Growth
Statement on risk management
AND internal control (cont’d)
RISK REVIEW FOR THE FINANCIAL YEAR
In evaluating the effectiveness of the risk oversight and internal controls, the Board considers the business risks that have impacted or are likely to impact the Group’s by conducting a risk engagement programme with all divisions. The monitoring reports were assessed and analysed for deliberation in the Board of Risk Committee, held once in the financial year of 2018.
The reports also indicated a major risk area of concerns and highlighted mitigating actions that were in place. Upon identifying significant risks posed within the Group, the management of the risks for the financial year of 2018 is outlined in the diagram below:
TRANSFER MANAGEMENT RISK CASH FLOW MANAGEMENT RISK OPERATIONAL RISK
• Over the years, the Group faced risks • The ERM Committee has been • The Group has introduced various that contributed to the fluctuation extablished and it has effectively measures to sustain human capital of the Group’s performance which operated and monitored its debtors and by way of providing training and among others has dragged the Group’s creditors as well as the centralisation of workshop to the workforce as well achievement the financial aspect of the Group and as ensuring the competitiveness of such initiative is led by a dedicated unit the remuneration benefits for the • The Group has assessed and reduced to oversee cash flow management from workforce in the Group the risk by way of a comprehensive time to time study and feasibility analysis • The Group has also mitigated • By the end of financial year 2018, operational risk by streamlining • The Board has acknowledged the the Group has materialised several policies and governance benefiting impact of the risk within the Group’s strategies in balancing the inflow and the business of the Group business activities and ensures that outflow of the Group’s financial book the risk management is thoroughly • The Board has acknowledged the excercised within the Group • The Group undertakes a continuous operational risk and ensures that the supervision and monitoring of the cash mitigation and action plans are in flow management to shape a better place to minimise the risk to the productivity to the Group Group
• The Board has acknowledged the reporting of the financial performance and ensures that the cash flow management risk is well managed by the Group
INTERNAL AUDIT FUNCTION
The in-house Internal Audit Department’s (IAD) role is to provide the Board with the assurance it requires regarding the adequacy and integrity of internal control across the Group. The IAD’s objective to provide an independent, objective assurance and consulting activity designed to add value and improve the Group’s operations.
During the financial year, the IAD provided continuous assessments that risks, were being adequately evaluated, managed, monitored and mitigated. The IAD reviewed all internal control processes in the key activities of the Group’s businesses by adopting a risk-based internal audit approach and reports directly to the Audit Committee. Reports on internal audit findings together with recommendations for Management actions were presented to the Audit Committee where it then reports to the Board of Directors by the Audit Committee on a quarterly basis or as appropriate.
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Statement on risk management
AND internal control (cont’d)
For each financial year, IAD prepares the annual Internal Audit Plan and presents it to the Audit Committee for their approval. The scope of work in the Audit Plan encompasses a review of financial and operational activities within the Group.
The IAD has completed the planned audits for the year and will closely monitor the implementation progress of its audit recommendations to ensure that all major risks and control concerns have been duly addressed by the Management. All internal audit reports together with the recommended action plans and their implementation status have been presented to the Management and Audit Committee.
STATE OF INTERNAL CONTROL DURING THE PERIOD UNDER REVIEW
The Board is satisfied with the adequacy, effectiveness and integrity of the systems of risk management and internal control and is committed to improving where necessary to further enhance the Group’s system of risk management and internal control. The system of risk management and internal control of the Group is regularly reviewed by the Audit Committee and in 2018 onwards; the Board Risk Management Committee is to enhance the oversight of risks management.
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
As required by Paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the External Auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Recommended Practice Guide (RPG) 5 (Revised) issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require External Auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.
This Statement was approved by the Board of Directors on 19 March 2019.
71 Establishing Sustainable Growth STATEMENT ON DIRECTORS’ RESPONSIBILITY
The Board consider that, in preparing the financial statements of the Company and of the Group for the financial year ended 31 December 2018, the Company and the Group have used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Directors also consider that all applicable approved accounting standards in Malaysia have been followed and confirm that the financial statement have been prepared on a going process basis.
The Directors are responsible for ensuring that the Company and its subsidiaries keep accounting records which disclose with reasonable accuracy at any time the financial statements comply with the provisions of the Companies Act, 2016. The Directors are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
This Statement was approved by the Board of Directors on 19 March 2019.
72 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD RECURRENT RELATED PARTY TRANSACTIONS
TRANSACTING PARTIES RELATIONSHIP OF NATURE OF TRANSACTION AGGREGATE TRANSACTING PARTY VALUE OF TRANSACTION DURING THE FINANCIAL YEAR 2018 (RM’000)
JCorp Group - Damansara JCorp is a substantial Miscellaneous services offered by DBhd to 2,059 Realty (Johor) Sdn. Bhd. shareholder of DBhd, by JCorp Group such as supplier, contractor or (DRJ) & DBhd Group virtue of Section 7 of the project manager of construction projects Companies Act, 2016 and sales, marketing agent and other related services
KPJ Group - HTS KPJ is an associated of Consultancy services for hospital planning, 4,202 JCorp. JCorp is a substantial commissioning, construction and operation shareholder of DBhd by provided by HTS virtue of Section 7 of the Companies Act, 2016
KPJ Group - HTS KPJ is an associated of Facility management services for hospital 1,119 JCorp. JCorp is a substantial provided by HTS shareholder of DBhd by virtue of Section 7 of the Companies Act, 2016
JCorp Group - MPM JCorp is a major shareholder Rental of spaces for parking operations to 2,230 of DBhd by virtue of Section MPM 7 of the Companies Act, 2016
KPJ Group - MPM KPJ is an associated of Rental of spaces for parking operations to 2,033 JCorp. JCorp is a substantial MPM shareholder of DBhd by virtue of Section 7 of the Companies Act, 2016
73 Establishing Sustainable Growth
RECURRENT RELATED PARTY TRANSACTIONS (cont’d)
TRANSACTING PARTIES RELATIONSHIP OF NATURE OF TRANSACTION AGGREGATE TRANSACTING PARTY VALUE OF TRANSACTION DURING THE FINANCIAL YEAR 2018 (RM’000)
JCorp Group - TMR JCorp is a substantial Facility management services for 1,951 shareholder of DBhd, by commercial buildings provided by TMR virtue of Section 7 of the Companies Act, 2016
KPJ Group - HCD KPJ is an associated of Cleaning services offered by HCD and other 17,069 JCorp. JCorp is a substantial related expenses (i.e. rental of cleaning shareholder of DBhd by equipment, sales of toiletries, rental of virtue of Section 7 of the toilet equipment and others) Companies Act, 2016
JCorp Group - HCD & TMR JCorp is a substantial Cleaning services offered by HCD and 1,339 shareholder of DBhd, by TMR, other related expenses (i.e. rental virtue of Section 7 of the of cleaning equipment, sales of toiletries, Companies Act, 2016 rental of toilet equipment, landscaping and other related activities)
74 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD ADDITIONAL COMPLIANCE INFORMATION
UTILISATION OF PROCEEDS During the financial year, the proceeds from the issuance of Redeemable Convertible Notes (RCN) are to be utilised for financing of property development activities and working capital requirements as follows:
Purpose Proposed Utilisation Actual Utilisation Intended Timeframe RM’000 RM’000 for Utilisation
Financing of property development activities 77,000 - Within 36 months
Working capital requirements 61,000 6,796 Within 36 months
Estimated expenses in relation to the Proposed Notes Issued 12,000 1,204 Within 36 months
Total 150,000 8,000
On 7 November 2018, RCN was mutually terminated and RM3.5 million RCN was redeemed.
AUDIT FEES AND NON-AUDIT FEES
The fees paid/payable to the External Auditors, JAP in relation to the audit and non-audit for the financial year ended 31 December 2018 are as follows:
Group Company RM’000 RM’000 Audit fees 433 65 Non-audit fees - - Total 433 65
MATERIAL CONTRACT
Except as otherwise disclosed in this report, there were no material contracts involving Directors and Substantial Shareholders entered by Damansara Realty Berhad for the FY2018.
RELATED PARTY TRANSACTIONS AND RECURRENT RELATED PARTY TRANSACTIONS (RPT AND RRPT)
All RPT including RRPT entered into by the Group were made in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with other persons or charged on the basis of equitable rates agreed between the parties. All RPT are reviewed by the Board Audit Committee and reported to the Board.
At the forthcoming AGM to be held on 19 June 2019, the Company intends to seek its shareholders’ approval to renew the existing mandate for recurrent related party transactions of a revenue or trading nature. The details of the shareholders’ mandate to be sought will be furnished in the Circular to Shareholders dated 30 April 2019 attached to this Annual Report.
75
DRIVING SUSTAINABLE GROWTH
Improving organic growth by focussing on high- growth markets and better margins. We are combining our diverse strengths, capabilities and resources for competitive edge and continued expansion in our existing business segments to deliver sustainable earnings for the long term.
CHAPTER 04 | Financial Statements
78 Directors’ Report 82 Statement by Directors 82 Statutory Declaration 83 Independent Auditors’ Report 88 Statement of Comprehensive Income 89 Statement of Financial Position 91 Statement of Changes in Equity 94 Statement of Cash Flows 96 Notes to the Financial Statements Establishing Sustainable Growth
DIRECTORS’ REPORT
The directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2018.
Principal activities
The principal activities of the Company are investment holding and project management.
The principal activities of the subsidiaries are described in Note 17 to the financial statements.
There has been no significant change in the nature of the principal activities during the financial year.
Results
Group Company RM’000 RM’000
Profit for the year 19,541 17,679
Profit attributable to:
Owners of the parent 19,120 17,679
Non-controlling interests 421 -
19,541 17,679
There was no material transfer to or from reserves or provisions during the financial year other than as disclosed in the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in the notes to the financial statements.
Dividends
No dividends have been paid or declared since the end of the previous year. The directors do not recommend dividend to be paid in respect of the current financial year.
Shares and debentures
During the financial year:- a) the Company did not issue any new debentures. b) the Company issued RM8.0 million Redeemable Convertible Medium Term Notes (RCN) for financing of property development activities and working capital requirements in financial year ended 31 December 2017. RCN of RM4.0 million were converted into 8,000,000 new ordinary shares of the Company at conversion price of RM0.50 per share. The salient terms of the RCN are disclosed in Note 27 to the financial statements. The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company.
On 7 November 2018, RCN was mutually terminated and RM3.5 million RCN was redeemed.
78 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
DIRECTORS’ REPORT (cont’d)
Bonus issues of warrants
The warrants are listed on the Main Market of Bursa Malaysia Securities Berhad with effect from 8 November 2017. Each warrant carried the right to subscribe for 1 bonus issue of warrants for 2 shares of RM0.58 each in the Company at any time from 4 October 2017 up to the expiry date on 4 December 2020, at an exercise price of RM0.58 for each new share. Any warrant not exercised by the expiry of the exercise period will lapse and cease to be valid for all purposes.
No warrants were issued and excercised during the financial year. Share options
No option have been granted by the Company to any parties during the financial year to take up unissued shares of the Company.
No shares have been issued during the financial year by virtue of the excersice of any option to take up unissued shares of the Company. As of the end of the financial year, there were no unissued shares of the Company under options.
Directors
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Dato’ Ahmad Zahri bin Jamil (Chairman) Dato’ Mohd Aisom bin Omar Shahrizam bin A Shukor Abdullah bin Md Yusof Ts. Brian Iskandar bin Zulkarim (Appointed on 2 July 2018) Azhari bin Abdul Hamid (Appointed on 2 July 2018) Vinie Chong Pui Ling (Appointed on 1 July 2018) Dato’ Daing A Malek bin Daing A Rahaman (Retired on 19 November 2018) Zainah binti Mustafa (Retired on 27 June 2018) Datuk Md Othman bin Hj Yusof (Resigned on 19 November 2018) Wan Azman bin Ismail (Resigned on 21 September 2018)
Directors’ interest
According to the register of directors’ shareholding under section 59 of the Companies Act, 2016, the interests of directors in office at the end of the year in the ordinary shares of the Company and its related corporations during the financial year are as follows:
Number of ordinary shares
Name of director 01.01.2018 Acquired Sold 31.12.2018
Direct interest in the Company:
Dato’ Ahmad Zahri bin Jamil 20,000 - - 20,000
79 Establishing Sustainable Growth
DIRECTORS’ REPORT (cont’d)
Directors’ interest (cont’d)
None of the other directors in the office at the end of the financial year have interest in shares of the Company or its related corporations during the year.
Directors’ remunerations
The details of the directors’ remuneration paid or payable to the directors of the Group and of the Company during the financial year are disclosed in Note 11 to the financial statements.
Directors’ benefits
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit 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.
The directors and officers of the Group and of the Company are covered by Directors and Officers liability insurance for any liability incurred in the discharge of their duties, provided that they have not acted fraudulently or dishonestly or derived any personal profit or advantage. The insurance is maintained on the group basis by the Company and the premium incurred during the financial year amounted to RM55,000.
Other statutory information
Before the financial statements of the Group and of the Company were prepared, the directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing-off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there were no known bad debts and that adequate allowance had been made for impairment losses on receivables; and
(b) to ensure that any current assets which were unlikely to be realised at their book values in the ordinary course of business including the value of current assets as shown in the accounting records of the Group and of the Company have been written down to an amount which the current assets might be expected so to realise.
As of the date of this report, the directors are not aware of any circumstances: a) that would require the writing-off of bad debts or the amount of the allowance for doubtful debts inadequate to any substantial extent in the financial statements of the Group and of the Company; or b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or c) which 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; or d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.
80 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
DIRECTORS’ REPORT (cont’d)
Other statutory information (cont’d)
As of the date of this report, there does not exist: a) any 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 b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
No contingent or other liability has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet its obligations as and when they fall due.
In the opinion of the directors: a) the results of the operations of the Group and of the Company during the year were not substantially affected by any item, transaction or event of a material and unusual nature. b) no item, transaction or event of a material and unususal nature has 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 which is likely to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made.
Holding company
The Company is a subsidiary of Seaview Holdings Sdn. Bhd., a company incorporated in Malaysia.
Auditors’ remunerations
Total amounts paid to or receivable by the auditors as remunerations for their services as auditors are as follows:
Group Company 2018 2018 RM’000 RM’000
Statutory audit 433 65
Auditors
The auditors, Messrs. Jamal, Amin & Partners, Chartered Accountants, have indicated their willingness to accept reappointment in accordance with Section 267(4) of the Companies Act, 2016.
Signed on behalf of the Board of Directors in accordance with a resolution of the directors dated 19 March 2019.
Dato’ Ahmad Zahri bin Jamil Ts. Brian Iskandar bin Zulkarim
Kuala Lumpur 19 March 2019
81 Establishing Sustainable Growth
STATEMENT BY DIRECTORS Pursuant to Section 251 (2) of the Companies Act, 2016
We, Dato’ Ahmad Zahri bin Jamil and Ts. Brian Iskandar bin Zulkarim, being two of the directors of Damansara Realty Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 88 to 165 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018 and of their financial performance and cash flows for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors dated 19 March 2019.
Dato’ Ahmad Zahri bin Jamil Ts. Brian Iskandar bin Zulkarim
Kuala Lumpur
Statutory Declaration Pursuant to Section 251 (1) of the Companies Act, 2016
I, Zain Azrai bin Zainuddin, being the officer primarily responsible for the financial management of Damansara Realty Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 88 to 165 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed, Zain Azrai bin Zainuddin at Kuala Lumpur in the Federal Territory on 19 March 2019 Zain Azrai bin Zainuddin (MIA : 15691)
Before me,
82 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Independent auditors’ report to the members of Damansara Realty Berhad
Report on the audit of the financial statements Opinion
We have audited the financial statements of Damansara Realty Berhad, which comprise the statements of financial position as at 31 December 2018 of the Group and of the Company, and the statements of 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 88 to 165.
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 December 2018, and of their financial performance and their cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.
Basis for opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and other ethical responsibilities
We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice)of the Malaysian Institute of Accountants (By-Laws) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current 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.
Key audit matters How our audit addressed the key audit matters
1. Revenue recognition (Note 4 to the Financial Statements)
Revenue of the Group was represented by revenue from Our audit procedures included, among others; Property and Land Development (PLD), Integrated Facilities • Reviewed the method and basis used by the Group to recognise Management (IFM) and Project Management Consultancy revenue. (PMC). • Evaluated the application of methods and reasonableness of In the current year, revenue was recognised at the basis used by management to recognise the revenue. RM304.1 million. Significant judgement was used by the management in determining the method and basis of • Performed test on the completeness of the data used by revenue recognition. management.
• Assessed the reasonableness of the percentage of completion for the work performed by agreeing to supporting documents i.e, sales and purchase agreements, agreements and progress reports with acknowledgement of acceptance by the customers.
83 Establishing Sustainable Growth
Independent auditors’ report to the members of Damansara Realty Berhad (cont’d)
Key audit matters (cont’d)
Key audit matters How our audit addressed the key audit matters
2. Impairment of assets
a. Property, plant and equipment (PPE) Our audit procedures included, among others; (Note 14 to the financial statements) • Obtained Fixed Asset Register and ensure that costs and The Group has a PPE net book value of RM22.7 million. accumulated depreciations were correctly recorded. More than RM20 million is from Metro Parking (M) • Verified the current year PPE additions and disposal by vouching Sdn. Bhd. (MPM) where the major assets are mainly to invoice and Directors’ Circular Resolution (DCR) respectively. machines. • Performed physical sightings on the conditions and existence of Some of the parking machines are no longer in operable the PPE. conditions and obsolete. • Assessed the Group’s assumptions and estimates used to determine the recoverable amount of PPE and any impairment losses recognised, using our judgement.
• Assessed internal control designed for identification of impairment indicators.
• Evaluated the adequacy of disclosure in respect of impairment.
b. Investments in subsidiaries Our audit procedures included, among others; (Note 17 to the financial statements) • Checked on management’s computation on Net Tangible Asset The Company’s carrying amount of investment in test. subsidiaries represent 23% of the Company’s total • Obtained justification and assessed the reasonableness of the assets. justifications provided by the Management for not impairing some investments.
• Assessed the Group’s assumptions and estimates used to determine the recoverable amount of subsidiaries and any impairment losses recognised, using our judgement.
• Evaluated the adequacy of disclosure in respect of impairment.
c. Trade and other receivables Our audit procedures included, among others; (Note 21 to the financial statements) • Reviewed the Group’s trade and other receivables schedule of The Group has a material credit exposure in its portfolio debtors written off prepared by management. of trade and other receivables. Given the nature of • Evaluated the reasonableness of the methods and assumptions these assets, the assessment of impairment requires used by management to estimate the debtors written off and if the application of significant judgement. management’s methods and assumptions are reasonable. The Management considered and conducted • Performed test on the accuracy and completeness of the data impairment test to assess the recoverability of the used by management. trade and other receivables and resulted in debtors written off during the current financial year.
84 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Independent auditors’ report to the members of Damansara Realty Berhad (cont’d)
Key audit matters (cont’d)
Key audit matters How our audit addressed the key audit matters
2. Impairment of assets (cont’d)
d. Inventories Our audit procedures included, among others; (Note 15 to the financial statements) • We tested that the net realisable value (NRV) of inventory lines The Group held RM83.9 million inventories as at to the recent selling prices. 31 December 2018 making out 25% of the Group’s • Conducted stock count to ensure the recorded inventories exist total assets. Given the size of the inventories, it requires and accurate. significant audit attention. • Assessed the development progress of the project by reviewing Apart from finished goods, raw materials and project schedules. consumable stores, inventories also consist of land held for property development and property development • Verifying the additional property development costs incurred costs. during the year by vouching to the progress claims.
e. Goodwill on Consolidation Our audit procedures included, among others; (Note 20 to the Financial Statements) • Critically evaluating the determination of the cash-generating Goodwill arises as a result of acquisitions by TMR units. Group. Under MFRS, the Group is required to annually • Evaluating whether the model used to calculate the fair test goodwill for impairment. This assessment requires value less costs to sell and value in use of the individual cash- the exercise of significant judgement about future generating units complies with the requirements of MFRS136: market conditions, including growth rates and discount Impairment of Assets. rates, particularly those effecting the business of TMR Group. • Validating the assumptions applied and inputs in the respective models by comparing it to historical information and approved budgets.
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 Director’s Report but does not include the financial statements of the Company and our auditors’ report thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the 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 these 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 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.
85 Establishing Sustainable Growth
Independent auditors’ report to the members of Damansara Realty Berhad (cont’d)
Responsibilities of the directors for the financial statements (cont’d)
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 standard on auditing in Malaysia and International Standard on Auditing will always detect a material misstatement when it exist. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s 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 disclosure 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 company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible fo 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.
86 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Independent auditors’ report to the members of Damansara Realty Berhad (cont’d)
Auditors’ responsibilities for the audit of the financial statements (cont’d)
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 circumtances, 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.
Report on other legal and regulatory requirements
In accordance with the requirements of the Companies Act, 2016 in Malaysia, we also report:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the financial statements, being accounts that have been included in the consolidated accounts.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.
(d) Our audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment required to be made under Section 266(3) of the Act.
Other matters
This report is mades 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.
Messrs. Jamal, Amin & Partners Ahmad Hilmy bin Johari AF: 1067 No. 2977/03/20(J) Chartered Accountants Chartered Accountant
Kuala Lumpur, Malaysia 19 March 2019
87 Establishing Sustainable Growth
Statements of comprehensive income For the financial year ended 31 December 2018
Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Revenue 4 304,125 249,742 13,288 7,239 Cost of sales (222,668) (194,444) - -
Gross Profit 81,457 55,298 13,288 7,239 Other items of income: Interest income 5 290 192 26 10 Dividend income from subsidiaries 6 - - 680 1,334 Other income 7 7,951 28,961 20,262 10,115 Other items of expense: Depreciation (2,164) (2,195) (115) (475) Finance costs 8 (1,252) (1,345) (55) (278) Employee benefits expense 9 (33,753) (34,134) (10,426) (14,082) Other expenses (26,413) (27,483) (5,848) (4,229) Share of loss of associate company - (166) - -
Profit/(Loss) before tax 10 26,116 19,128 17,812 (366) Income tax expense 12 (6,575) (1,271) (133) 1,912
Profit for the year 19,541 17,857 17,679 1,546
Other comprehensive income/(loss), net of tax Foreign currency translation differences for foreign operations (41) 547 - -
Total comprehensive income for the year 19,500 18,404 17,679 1,546
Profit attributable to: Owners of the parent 19,120 17,015 17,679 1,546 Non-controlling interests 421 842 - -
19,541 17,857 17,679 1,546
Total comprehensive profit attributable to: Owners of the parent 19,079 17,562 17,679 1,546 Non-controlling interests 421 842 - -
19,500 18,404 17,679 1,546
Group 2018 2017
Basic profit per share attributable to owners of the parent (sen per share)
For the year (Note 13) 6.01 5.48
The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 88 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Statements of financial position As at 31 December 2018
Group Company Note 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets Non-current assets Property, plant and equipment 14 22,717 25,026 23,216 472 530 933 Inventories 15 60,755 59,709 227,342 - - - Investment properties 16 89,141 89,177 3,054 1,455 1,491 3,054 Investment in subsidiaries 17 - - - 27,116 28,833 27,333 Deferred tax assets 18 3,324 530 779 - - - Other investments 19 51 51 51 51 51 51 Goodwill on consolidation 20 888 1,410 1,410 - - -
176,876 175,903 255,852 29,094 30,905 31,371
Current assets Inventories 15 23,096 19,717 4,000 - - - Trade and other receivables 21 105,162 81,481 51,815 90,811 67,370 63,286 Other current assets 22 707 12,153 5,385 148 11 206 Cash and bank balances 23 27,120 27,472 25,672 222 795 354 156,085 140,823 86,872 91,181 68,176 63,846
Total assets 332,961 316,726 342,724 120,275 99,081 95,217
The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 89 Establishing Sustainable Growth
Statements of financial position As at 31 December 2018 (cont’d)
Group Company Note 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Equity and liabilities Current liabilities Loans and borrowings 24 9,555 18,912 14,230 3,198 3,646 7,480 Trade and other payables 25 139,473 119,337 227,298 50,559 48,142 44,972 149,028 138,249 241,528 53,757 51,788 52,452
Net current assets/(liabilities) 7,057 2,574 (154,656) 37,424 16,388 11,394
Non-current liabilities Other payables 25 - 9,850 - - - - Loans and borrowings 24 7,364 12,375 5,013 42 2,244 78 Deferred tax liabilities 18 1,740 533 480 64 - - 9,104 22,758 5,493 106 2,244 78
Total liabilities 158,132 161,007 247,021 53,863 54,032 52,530
Net assets 174,829 155,719 95,703 66,412 45,049 42,687
Equity attributable to owners of the parent Share capital 26 159,341 155,341 154,685 159,341 155,341 154,685 Share premium 26 - - 156 - - 156 Merger deficit 26 (18,568) (18,568) (18,568) - - - Redeemable convertible notes 27 - 316 - - 316 - Accumulated losses (10,370) (29,449) (47,011) (92,929) (110,608) (112,154) Exchange reserve 26 (1,884) (1,925) (1,378) - - - Revaluation reserve 26 41,603 41,603 - - - - Capital reserve 26 56 85 85 - - - 170,178 147,403 87,969 66,412 45,049 42,687 Non-controlling interests 4,651 8,316 7,734 - - -
Total equity 174,829 155,719 95,703 66,412 45,049 42,687
Total equity and liabilities 332,961 316,726 342,724 120,275 99,081 95,217
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
90 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Statement of changes in equity - Group For the financial year ended 31 December 2018 (345) Total (120) 4,000 Equity 19,541 (3,966) RM’000 155,719 174,829 - - 421 Non- (120) 8,316 4,651 (3,966) RM’000 interests controlling - - (345) Total 4,000 19,120 147,403 170,178 RM’000 - - - - 19,079 RM’000 (29,449) (10,370) Accumulated profit/(losses) - - - - 41 (1,925) (1,884) reserve RM’000 Exchange - - - - - 41,603 41,603 reserve RM’000 (Note 26) (Note Revaluation Revaluation - - - - - 316 (316) RM’000 (Note 27) (Note Notes (RCN) Notes Convertible Redeemable - - - - - deficit Merger RM’000 (18,568) (18,568) (Note 26) (Note - - - - 85 56 (29) Non-distributable Capital reserve RM’000 Attributable to owners of the parent owners to Attributable (Note 26) (Note ------Share RM’000 (Note 26) (Note premium - - - - 4,000 Share capital RM’000 155,341 159,341 (Note 26) (Note 2018 1 January 2018 At of RCN Conversion RCN of Termination Disposal of subsidiary (loss)/ comprehensive Total income non-controlling Dividends to interests 31 December 2018 At statements. part of the financial form an integral notes explanatory policies and accounting The accompanying 91 Establishing Sustainable Growth
Statement of changes in equity - Group For the financial year ended 31 December 2018 (cont’d) - 500 316 Total (260) Equity 95,703 17,857 41,603 RM’000 155,719 - - - - 842 Non- (260) 7,734 8,316 RM’000 interests controlling - - 500 316 Total 87,969 41,603 17,015 147,403 RM’000 - - - - - 17,562 (47,011) RM’000 (29,449) Accumulated profit/(losses) - - - - - (547) (1,378) (1,925) reserve RM’000 Exchange ------41,603 41,603 reserve RM’000 (Note 26) (Note Revaluation Revaluation ------316 316 RM’000 (Note 27) (Note Notes (RCN) Notes Convertible Redeemable ------deficit Attributable to owners of the parent owners to Attributable Merger (18,568) RM’000 (18,568) (Note 26) (Note ------85 85 Non-distributable Capital reserve RM’000 (Note 26) (Note ------156 (156) Share RM’000 (Note 26) (Note premium - - - - 156 500 Share capital RM’000 154,685 155,341 (Note 26) (Note component of RCN component (loss)/income investment properties investment 2017 1 January 2017 At share from Transfer premium of revaluation Arising from of RCN Conversion equity Estimated comprehensive Total non-controlling Dividends to interests 31 December 2017 At The accompanying accounting policies and explanatory notes form an integral part of the financial statements. part of the financial form an integral notes explanatory policies and accounting The accompanying 92 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Statement of changes in equity - COMPANY For the financial year ended 31 December 2018 (cont’d)
Non-distributable Redeemable Share Share convertible Accumulated Equity capital premium notes (RCN) losses Total RM’000 RM’000 RM’000 RM’000 RM’000
2018
At 1 January 2018 155,341 - 316 (110,608) 45,049
Conversion of RCN 4,000 - (316) - 3,684 Total comprehensive income - - - 17,679 17,679
At 31 December 2018 159,341 - - (92,929) 66,412
2017
At 1 January 2017 154,685 156 - (112,154) 42,687
Transfer from share premium 156 (156) - - -
Conversion of RCN 500 - - - 500 Estimated equity component of RCN - - 316 - 316 Total comprehensive income - - - 1,546 1,546
At 31 December 2017 155,341 - 316 (110,608) 45,049
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
93 Establishing Sustainable Growth
Statement of cash flows For the year ended 31 December 2018
Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Cash flow from operating activities Profit/(Loss) before tax 26,116 19,128 17,812 (366) Adjustments for: Interest income (290) (192) (26) (2,860) Interest expense 1,252 1,345 55 278 Impairment loss on financial assets: Trade receivables - 1,555 - - Other receivables - 1,811 - - Reversal of impairment of other receivables (13) (1,331) (891) (275) Creditors write back - (5,950) - (3,956) Depreciation of property, plant and equipment 5,599 6,499 79 433 Depreciation of investment properties 36 42 36 42 Impairment loss on property, plant and equipment 266 158 - - Gain on disposal of investments properties - (979) - (979) Gain on disposal of property, plant and equipment (98) - - - Gain on disposal of investment - (18,774) - - Gain on disposal of subsidiaries (1,944) - (9,322) -
Operating profit/(loss) before working capital changes 30,924 3,312 7,743 (7,683)
Changes in working capital:- Decrease property development cost 98 151,111 - - (Increase)/Decrease in inventories (4,523) 805 - - (Increase)/Decrease in trade and other receivables (14,089) (85,883) 1,670 (2,648) Increase/(Decrease) trade and other payables 8,609 (87,953) (1,453) 9,306 Increase amount due from subsidiary companies - - (13,312) (1,241) Increase amount due to subsidiary companies - - 3,801 -
Cash generated from/(used in) operations 21,019 (18,608) (1,551) (2,266)
Taxes paid (2,055) (448) - - Taxes refunded 66 339 - 7 Interest paid (1,252) (1,345) (55) (278) Interest received 290 192 26 2,860
Net cash generated from/(used in) operating activities 18,068 (19,870) (1,580) 323
The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 94 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Statement of cash flows For the year ended 31 December 2018 (cont’d)
Group Company Note 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Cash flow from investing activities Purchase of property, plant and equipment (4,358) (10,763) (27) (30) Net cash outflows from disposal of subsidiaries (2,822) - - - Proceed from disposal of property plant and equipment 100 23 - - Proceed from disposal of investment property - 2,500 - 2,500 Proceed from disposal of investment - 18,800 - - Purchase of shares in subsidiaries - - - (1,500) Proceed from issuance of shares - 500 - 500
Net cash (used in)/generated from investing activities (7,080) 11,060 (27) 1,470
Cash flow from financing activities Proceeds from issuance of RCN 5,000 - 5,000 - Payment for redemption RCN (4,025) - (4,025) - Drawdown of loan 212 9,744 59 2,500 Drawdown of lease 785 2,853 - - Repayment of loan (2,889) (2,556) - (3,852) Repayment of lease (3,621) (7,122) - -
Net cash (used in)/generated from financing activities (4,538) 2,919 1,034 (1,352)
Net increase/(decrease) of cash and cash equivalents 6,450 (5,891) (573) 441
Cash and cash equivalents at beginning of year 15,283 21,174 795 354
Cash and cash equivalents at end of year 23 21,733 15,283 222 795
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
95 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018
1. Corporate information
The financial statements have been prepared in accordance with the Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRS) and the provisions of the Companies Act 2016 in Malaysia.
Damansara Realty Berhad (the Company), a public limited liability company incorporated and domiciled in Malaysia is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business is located at Lot 10.3, Level 10, Wisma Chase Perdana, Off Jalan Semantan, Damansara Heights, 50490, Kuala Lumpur.
The immediate and ultimate holding company is Seaview Holdings Sdn. Bhd. which is incorporated in Malaysia.
The principal activities of the Company are investment holding and project management. The principal activities of the subsidiaries are described in Note 17.
There has been no significant changes in the nature of the principal activities during the financial year.
2. Summary of significant accounting policies
2.1 Basis of preparation
The financial statements have been prepared in accordance with the Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRS) and the requirements of the Companies Act, 2016 in Malaysia.
The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.
The financial statements of the Group and of the Company for the financial year ended 31 December 2018 are the first set of financial statements prepared in accordance with MFRS, including MFRS 1 - First-time Adoption of MFRS. Subject to certain transition elections as disclosed in Note 35, the Group and the Company have consistently applied the same accounting polices in their opening MFRS statements of financial position as at 1 January 2017, being the transition date, and throughout all years presented, as if these policies had always been in effect. The impact of the transition to MFRS on the Group’s and the Company’s reported financial position, financial performance and cash flows, are disclosed in Note 35.
2.2 Statement of compliance
Application of new MFRSs, IC Interpretations and amendments to MFRSs
During the financial year, the Company have applied the following new MFRSs, IC Interpretations and amendments to MFRSs issued by the Malaysian Accounting Standard Board (MASB) which are effective from the beginning of the current financial year:-
MFRS 9, Financial instruments (IFRS 9 issued in July 2014) MFRS 15, Revenue from contracts with customers Clarification to MFRS 15, Revenue from contracts with customers Amendments to MFRS 2, Classification and measurement of share-based payment transactions Amendments to MFRS 4 – Applying MFRS 9, Financial instruments with MFRS 4, Insurance contracts Amendments to MFRS 140 – Transfer of investment property Amendments to MFRSs Classified as “Annual Improvements to MFRS Standards 2014-2016 Cycle”: (i) Amendments to MFRS 1, First-time adoption of Malaysian Financial Reporting Standards (ii) Amendments to MFRS 128, Investments in associates and joint ventures IC Interpretation 22, Foreign Currency transactions and advance consideration
The new MFRSs, IC Interpretations and amendments to MFRSs have no significant impact on the finacial statements of the Company.
96 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.2 Statement of compliance (cont’d)
Application of new MFRSs, IC Interpretations and amendments to MFRSs (cont’d)
(a) MFRS 9, Financial instruments (IFRS 9 issued in July 2014)
The Standard replaces earlier versions of MFRS 9 and introduces a package of improvements which includes a classification and measurement model, a single forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting. The key enhancements of MFRS 9 are: (i) Under MFRS 9, all recognised financial assets are required to be subsequently measured at either amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL) on the basis of both entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. These requirements improve and simplify the approach for classification and measurement of financial assets as the numerous categories of financial assets under MFRS 139 had been replaced. (ii) Most of the requirements in MFRS 139 for classification and measurement of financial liabilities were carried forward unchanged to MFRS 9, except for the measurement of financial liabilities designated as at FVTPL. Under MFRS 139, the entire amount of the change in the fair value of the financial liability designated under FVTPL is presented in profit or loss. However, MFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s own credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to financial liability’s credit risk are not subsequently reclassified to profit or loss. (iii) In relation to the impairment of financial assets, MFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under MFRS 139. Under MFRS 9, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Instead, an entity always accounts for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. (iv) The new general hedge accounting requirements retain the three types of hedge accounting mechanism currently available in MFRS 139 i.e, fair value hedges, cash flow hedges and hedges of a net investment in a foreign operation. MFRS 9 incorporates a new hedge accounting model that aligns the hedge accounting more closely with an entity’s risk management activities. The new hedge accounting model has also expanded the scope of eligibility of hedge items and hedge instruments respectively.
(b) MFRS 15, Revenue from contracts with customers
MFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. MFRS 15 supersede the current revenue recognition guidance including MFRS 111, MFRS 118 and the related IC Interpretations.
The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:-
Step 1 Identify the contract(s) with a customer Step 2 Identify the performance obligations in the contract Step 3 Determine the transaction price Step 4 Allocate the transaction price to the performance obligations in the contract Step 5 Recognise revenue when (or as) the entity satisfies a performance obligation
97 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.2 Statement of compliance (cont’d)
Application of new MFRSs, IC Interpretations and Amendments to MFRSs (cont’d)
(b) MFRS 15, Revenue from contracts with customers (cont’d)
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied i.e when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. MFRS 15 also requires more extensive disclosures.
(c) Clarifications to MFRS 15, Revenue from contracts with customers
The Amendments clarifies how certain principles should be applied in:-
(i) identifying whether the performance obligations are distinct; (ii) determining whether an entity is a principal or an agent; and (iii) assessing whether revenue from a license of intellectual property is recognised over time or at a point in time
New MFRSs, IC Interpretations and amendments to MFRSs that are in issue but not yet effective
The Company have not early adopted the following new MFRSs, IC Interpretations and amendments to MFRSs that have been issued by the MASB but are not yet affective:-
Effective for annual periods beginning on or after 1 January 2019
MFRS 16, Leases Amendments to MFRS 9 – Prepayment Features with Negative Compensation Amendments to MFRS 119 – Plan Amendment, Curtailment or Settlement Amendments to MFRS 128 – Long-term Interests in Associates and Joint Ventures Amendments to MFRSs Classified as “Annual Improvements to MFRS Standards 2015 - 2017 Cycle:
(i) Amendments to MFRS 3, Business Combinations and MFRS 11, Joint Arrangements – Previously Held Interest in a Joint Operation (ii) Amendments to MFRS 112, Income Taxes – Income Tax Consequences of Payments on Financial Instruments Classified as Equity (iii) Amendments to MFRS 123, Borrowing Costs – Borrowing Costs Eligible for Capitalisation
IC Interpretation 23, Uncertainty over Income Tax Treatments
Effective for annual periods beginning on or after 1 January 2020 Amendments to MFRS 3 - Definition of a Business Amendments to MFRS 101 and Amendments to MFRS 108 - Definition of Material
Effective for annual periods beginning on or after 1 January 2021 MFRS 17, Insurance Contracts
Effective for annual periods beginning on or after a date to be determined by the MASB Amendments to MFRS 10 and MFRS 128 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(a) MFRS 16, Leases
MFRS 16 will supersede the existing MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, IC Interpretation 115 Operating Leases – Incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease and its sets out the principles for the recognition, measurement, presentation and disclosures of leases.
98 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.2 Statement of compliance (cont’d)
New MFRSs, IC Interpretations and amendments to MFRSs that are in issue but not yet effective (cont’d)
(a) MFRS 16, Leases (cont’d)
Under the existing MFRS 117, lessees and lessors are required to classify their leases as either finance leases or operating leases and account for those two types of leases differently. It requires a lessee to recognise assets and liabilities arising from finance leases but not from operating leases.
The new MFRS 16 introduces a single accounting model and requires a lessee to recognise assets and liabilities for the rights and obligations arising from all leases and hence eliminates the distinction between finance leases and operating leases. As a consequence, a lessee recognises right-of-use assets and lease liabilities arising from operating leases. The right-of-use asset is depreciated in accordance with the principle in MFRS 116 Property, plant and equipment and these liability is accreted over time with interest expense recognised in the profit or loss.
(b) Amendments to MFRS 9 – Prepayment Features with Negative Compensation
The amendments allow entities to measure prepayable financial assets with negative compensation at amortised cost or at fair value through other comprehensive income if certain conditions are met.
(c) Amendments to MFRSs Classified as “Annual Improvements to MFRS Standards 2015-2017 Cycle”
The Annual Improvements to MFRS Standards 2015 – 2017 Cycle include amendments to the following MFRSs:-
(i) The amendments to MFRS 3 Business Combinations clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to MFRS 11 Joint Arrangements clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. (ii) The amendments to MFRS 112 Income Taxes clarify that an entity recognises the income tax consequences of dividends are linked more directly to past transactions than to distributions to owners, except if the tax arises from a transaction which is a business combination or is recognised in other comprehensive income or directly in equity. (iii) The amendments to MFRS 123 Borrowing Costs clarify that when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made specifically to obtain that qualifying asset as part of general borrowings.
(d) IC Interpretation 23, Uncertainty over income tax treatments
MFRS 112 Income Taxes, includes requirements on recognition and measurement of tax assets and tax liabilities, but does not specify how to reflect uncertainty. As a result, entities apply diverse reporting method when the application of tax law is uncertain.
When there is uncertainty over income tax treatments, the Interpretation addresses:-
(i) whether an entity considers uncertain tax treatment separately; (ii) the assumptions an entity makes about the examination of tax treatments by taxation authority; (iii) how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes in facts and circumstances.
The initial application of the new MFRSs, IC Interpretations and amendments to MFRSs is not expected to haveany significant impact on the Company’s financial statements.
99 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.3 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
The Group controls an investee if and only if the Group has all the following:
(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (ii) Exposure, or rights, to variable returns from its investment with the investee; and (iii) The ability to use its power over the investee to affect its returns.
When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:
(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
(ii) Potential voting rights held by the Company, other vote holders or other parties;
(iii) Rights arising from other contractual arrangements; and
(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra- group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.
2.4 Business combinations
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
100 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.4 Business combinations (cont’d)
Business combinations involving entities under common control are accounted for by applying the merger accounting method. The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any differences between the consideration paid and the share capital of the acquired entity is reflected within the equity merger (deficit)/reserve. The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparative are presented as if the entities had always been combined since the date the entities had come under common control.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
2.5 Foreign currency
(a) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.
(b) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit and loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.
(c) Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit and loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.
101 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.6 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
Buildings 10 to 50 years Plant and machinery 5 to 10 years Site infrastructure and renovations 10 to 14 years Office equipment, furniture and fittings 4 to 20 years Motor vehicles 5 years Medical equipment 10 years Renovation 5 to 10 years Plant and parking equipment 5 to 7 years Machinery and tools 5 to 10 years
Capital work in progress included in plant and equipment are not depreciated as these assets are not yet available for use.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.
2.7 Investment properties
Investment properties are initially recorded at cost, including transaction costs. Subsequent to recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is computed on a straight-line basis over the estimated useful lives of the investment properties at 50 years. The carrying values of investment properties are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.
102 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.7 Investment properties (cont’d)
Transfers are made to or from investment property only when there is a change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.6 up to the date of change in use.
2.8 Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash- generating units that are expected to benefit from the synergies of the combination.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the company and are recorded in RM at the rates prevailing at the date of acquisition.
2.9 Impairment of non-financial assets
The carrying amounts of non-financial assets (other than inventories, contract assets, lease receivables, deferred tax assets, assets arising from employee benefits, investment property that is measured at fair value and non-current assets or disposal groups held for sale) are reviewed for impairment at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss. For goodwill recognised in a business combination and that has an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated annually or more frequently when indicators of impairment are identified.
An impairment loss is recognised if the carrying amount of an asset or a cash generating unit (CGU) exceeds its recoverable amount. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment losses recognised in respect of CGUs (or groups of CGUs) are allocated first to reduce the carrying amount of any goodwill arising from a business combination allocated to the units (or groups of units) and then to reduce the carrying amount of the other assets in the units (or groups of units) on a pro rata basis.
The recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount in which case the impairment loss is recognised in other comprehensive income to the extent that the impairment loss does not exceed the amount in the revaluation reserve for that same asset.
103 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.9 Impairment of non-financial assets (cont’d)
Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss.
2.10 Subsidiaries
A subsidiary is an entity over which the Group has all the following:
(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
2.11 Investments in associates and joint ventures
An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s or joint venture’s profit or loss for the period in which the investment is acquired.
An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.
Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture after the date of acquisition. When the Group’s share of losses in an associate or a joint venture equal or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate or joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements of the associates and joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
104 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.12 Financial assets
The Group recognises all financial assets in its statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instruments.
All regular way purchases or sales of financial assets are recognised and derecognised using trade date accounting. A regular way purchase or sale is a purchase or sale of a financial asset that requires delivery of asset within the time frame established generally by regulation or convention in the marketplace concerned. Trade date accounting refers to:-
(i) the recognition of an asset to be received and the liability to pay for it on the trade date i.e. the date the Group commits itself to purchase or sell an asset; and (ii) derecognition of an asset that is sold, the recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment in the trade date.
Classsification
From 1 January 2018, the Group classifies its financial assets into the following measurement categories depending on the business models used for managing the financial assets and the contractual cash flow characteristics of the financial assets:
(i) at amortised cost; (ii) fair value through other comprehensive income; and (iii) fair value through profit or loss.
Financial assets are reclassified when and only when the Group changes its business model for managing the financial assets and the reclassification of all affected financial assets is applied prospectively from the reclassification date i.e. on the first day of the first reporting period following the change in business model.
Measurement
At initial recognition, trade receivables without a significant financing component are measured at their transaction price when they are originated.
Other financial assets are initially measured at fair value plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. Transaction costs of financial assets at fair value through profit or loss are expensed to profit or loss when incurred.
(a) Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business models for managing the financial assets and the contractual cash flows characteristics of the financial assets. The Group’s debt instruments are categorised into the following measurement categories:
(i) Amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met and it is not designated as at fair value through profit or loss at initial recognition:
• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
105 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.12 Financial assets (cont’d) Measurement (cont’d) (a) Debt instruments (cont’d) (i) Amortised cost (cont’d)
These financial assets are measured at amortised cost using the effective interest method less any impairment losses. Interest income, gains or losses on derecognition, foreign exchange gains or losses and impairment are recognised in profit or loss. Impairment losses are presented as a separate line item in the statement of profit or loss and other comprehensive income.
(ii) Fair value through other comprehensive income (FVOCI)
A financial asset is measured at FVOCI if both of the following conditions are met and it is not designated as FVTPL at initial recognition:
• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Changes in fair value of these financial assets are recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gains or losses previously recognised in other comprehensive income is reclassified from equity to profit or loss. Interest income calculated using the effective interest method, foreign exchange gains or losses and impairment are recognised in profit or loss. Impairment losses are presented as a separate line item in the statement of profit or loss and other comprehensive income.
(iii) Fair value through profit or loss (FVTPL)
A financial asset is measured at FVTPL if it does not meet the criteria for amortised cost or FVOCI. This includes all derivative financial assets.
The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL that otherwise meets the criteria for amortised cost or FVOCI if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Changes in fair value of financial assets at FVTPL and interest or dividend income are recognised in profit or loss.
(b) Equity instruments
The Group subsequently measures all equity investments at fair value.
For equity investments at FVTPL, changes in fair value are recognised in profit or loss. Where the Group has elected to present the changes in fair value in other comprehensive income, the amounts presented are not subsequently transferred to profit or loss when the equity investments are derecognised. The cumulative gains or losses is transferred to retained profits instead. The election is made on an instrument-by-instrument basis and it is irrevocable. The amount presented in other comprehensive income includes the related foreign exchange gains or losses.
Dividend income from equity investments at FVTPL and FVOCI is recognised in profit or loss as other income when the Group’s right to receive payment has been established.
Changes in the fair value of equity investments at FVTPL are recognised in other income or expenses, as applicable, in the profit or loss. Impairment losses or reversal of impairment losses on equity instruments measured at FVOCI are recognised in other comprehensive income and are not reported separately from other changes in fair value. 106 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.12 Financial assets (cont’d)
Derecognition of financial assets
The Group derecognises a financial asset when, and only when, the contractual rights to the cash flows from the financial asset expires or it transfers the financial asset without retaining control or transfers substantially all the risks and rewards of ownership of the financial asset to another party.
On derecognition of a financial asset in its entirety, the difference between the carrying amount measured at thedateof derecognition and the sum of the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.
Accounting policies applied until 31 December 2017
The Group has applied MFRS 9 retrospectively but has elected not to restate comparative information as permitted by the Standard. As a result, the comparative information provided in these financial statements continues to be accounted for in accordance with the previous accounting policies.
Until 31 December 2017, the Group’s financial assets were classified into the following specified categories depending on the nature and purpose of the financial assets and was determined at the time of initial recognition.
(a) Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.
(b) Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method 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. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.
107 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.12 Financial assets (cont’d)
Accounting policies applied until 31 December 2017 (cont’d)
(b) Available-for-sale financial assets (cont’d)
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.
2.13 Impairment of financial assets
From 1 January 2018, upon the adoption of MFRS 9, the Group recognises loss allowance for expected credit losses (ECLs) on:
(i) financial assets measured at amortised cost; (ii) debt instruments measured at fair value through other comprehensive income (FVOCI); (iii) contract assets; (iv) lease receivables; and (v) financial guarantee contracts.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months i.e. a 12-month ECL. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default i.e. a lifetime ECL.
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
For debt instruments at FVOCI, the Group applies the low credit risk simplification. At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the internal credit rating of the debt instrument. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due. When there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flow in its entirety or a portion thereof.
108 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.13 Impairment of financial assets (cont’d)
An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and the carrying amount of the asset is reduced through the use of an allowance account.
An impairment loss in respect of debt instruments measured at FVOCI is recognised in profit or loss and the allowance account is recognised in other comprehensive income.
Accounting policies applied until 31 December 2017
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.
(b) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
(c) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.
109 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.13 Impairment of financial assets (cont’d)
Accounting policies applied until 31 December 2017 (cont’d)
(c) Available-for-sale financial assets (cont’d)
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (netofany principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for- sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.
2.14 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.
2.15 Contract assets and contract liabilities
Contract asset is the right to consideration for goods or services transferred to the customers. In the case of property development and construction contracts, contract asset is the excess of cumulative revenue earned over the billings to-date. Contract assets are reviewed for impairment in accordance with the Group’s accounting policy on impairment as disclosed in Note 2.13.
Contract liability is the obligation to transfer goods or services to customers for which the Group has received the consideration or has billed the customer. In the case of construction contracts, contract liability is the excess of the billings to-date over the cumulative revenue earned. Contract liabilities include downpayments received from customers and other deferred income where the Group has billed or has collected the payment before the goods are delivered or services are provided to the customers.
2.16 Inventories
(a) Land held for property development
Land held for property development consists of land where no active development activity has been carried out or where development activity is not expected to be completed within the normal operating cycle. Such land is classified within non- current asset and is stated at cost less any accumulated impairment losses.
Land held for property development is reclassified to property development costs at the point when development activity has commenced and where it can be demonstrated that the development activity will be completed within the normal operating cycle.
Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.
When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bears to the estimated total property development costs.
110 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.16 Inventories (cont’d)
(a) Land held for property development (cont’d)
Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred.
Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.
(b) Property development costs
Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.
The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in profit or loss is classified as progress billings within trade payables.
(c) Finished goods, raw materials and consumable stores
Inventories are stated at the lower of cost and net realisable value. The cost of raw materials comprises costs of purchase. The cost of unsold completed inventory properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.
2.17 Contract costs
Contract costs are recognised as an asset when the following criteria are met:
(i) In relation to incremental costs of obtaining a contract, the Group recognises the costs as an asset if the Group expects to recover those costs.
(ii) In relation to costs to fulfil a contract, the Group recognises the contract costs as an asset if:
(i) they relate directly to a contract or to an anticipated contract that the Group can specifically identify;
(ii) when the costs generate or enhance resources of the Group that will be used in satisfying performance obligations in the future; and
(iii) the costs are expected to be recovered.
These assets are initially measured at cost and are subsequently amortised on a systematic basis that is consistent with the transfer to the customers of the goods or services to which the assets relate. An impairment loss is recognised in profit or loss to the extent that the carrying amount of the asset exceeds the remaining amount of consideration expected to be received less the remaining costs expected to be incurred. A reversal of impairment loss is recognised in profit or loss when the impairment conditions no longer exist or have improved. The increased carrying amount does not exceed the amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously.
111 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.18 Non-current assets held for sale (cont’d)
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.
On initial classification as held for sale, non-current assets (other than investment properties, deferred tax assets, employee benefits assets, financial assets and inventories) are measured at the lower of carrying amount and fair value less costs to sell. Any differences are included in the profit or loss.
2.19 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, itis probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.20 Financial liabilities
The Group recognises all financial liabilities in its statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instruments.
Financial liabilities are initially measured at fair value minus, in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. Transaction costs of financial assets at fair value through profit or loss are expensed to profit or loss when incurred.
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities measured at amortised cost.
(a) Fair value through profit or loss (FVTPL)
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL upon initial recognition or derivatives that are liabilities.
A financial liability is classified as held for trading if:-
(i) it has been incurred principally for the purpose of repurchasing it in the near term; or
(ii) on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
(iii) it is a derivative that is not designated and effective as a hedging instrument.
After initial recognition, financial liabilities at FVTPL are measured at fair value with any gains or losses arising from changes in fair value recognised in profit or loss. If a financial liability is designated as at FVTPL, the change in fair value that is attributable to changes in the credit risk of that liability is presented in other comprehensive income and the remaining change in fair value of the liability is presented in profit or loss. The net gains or losses recognised in profit or loss do not include any exchange differences or interest paid on the financial liability. Exchange differences and interest expense on financial liabilities at FVTPL are recognised separately in profit or loss as part of other income or other expenses.
112 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.20 Financial liabilities (cont’d)
(b) Amortised cost
All financial liabilities, other than those categorised as FVTPL are subsequently measured at amortised cost using the effective interest method.
A gain or loss on financial liabilities at amortised cost is recognised in profit or loss when the liabilities are derecognised and through the amortisation process.
Accounting policies applied Until 31 December 2017
Financial liabilities are classified according to the substance of the contractual arrangements entered into andthe definitions of a financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
(a) Other financial liabilities
The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
2.21 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are measured at the higher of (i) the amount determined in accordance with the expected credit loss model; and (ii) the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of MFRS 15 Revenue from Contracts with Customers.
113 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.22 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to preparethe asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
2.23 Employee benefits
(a) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. 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.
(b) Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.
Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (EPF).
Some of the Group’s foreign subsidiaries also make contributions to their respective countries’ statutory pension schemes.
2.24 Leases
(a) As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
114 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.24 Leases (cont’d)
(b) As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.25(b)(i).
2.25 Revenue and other income
The Group has applied MFRS 15 retrospectively with the cumulative effect of initially applying this Standard recognised at the date of initial application i.e. on 1 January 2018. Accordingly, the revenues recognised for 2017 have not been restated and they continue to be accounted for in accordance with the previous accounting policies.
From 1 January 2018, the Group recognises revenue from a contract with customer when it satisfies a performance obligation by transferring control of a promised good or service to the customer. Performance obligations may be satisfied over time or at a point in time. Revenue is measured based on the consideration specified in the contract which the Group expects to be entitled in exchange for transferring the good or service, excluding the amounts collected on behalf of third parties.
(a) Revenue
(i) 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 expected cost plus margin.
The revenue from property development is measured at the fixed transaction price agreed under the sales 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 do not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.
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. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset.
The Group recognises revenue over time using the output method, which is based on the level of completion of the physical proportion of contract work to date, certified by professional consultants.
The promised properties are specifically identified by its plot, lot and parcel number and its attributes (such as its size and location) as in the attached layout plan in the sale and purchase agreements. The purchasers could enforce its 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 property 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, 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.
115 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.25 Revenue and other income (cont’d)
(a) Revenue (cont’d)
(i) Property development (cont’d)
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 consideration to which it will be entitled to in exchange for the assets sold.
(ii) Construction contracts
The Group constructs residential properties under long-term contracts with customers who are property developers. The constructions are on the land owned by the customers. Revenue from construction of residential properties is recognised over time on a cost–to–cost method, i.e. based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. The directors consider that this input method is an appropriate measure of the progress towards complete satisfaction of these performance obligations under MFRS 15.
The Group becomes entitled to invoice customers for construction of residential properties based on achieving a series of performance-related milestones. When a particular milestone is reached the customer is sent a relevant statement of work signed by a third party assessor and an invoice for the related milestone payment. The Group will previously have recognised a contract asset for any work performed. Any amount previously recognised as a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer. If the milestone payment exceeds the revenue recognised to date under the cost–to–cost method then the Group recognises a contract liability for the difference. There is not considered to be a significant financing component in construction contracts with customers as the period between the recognition of revenue under the cost–to–cost method and the milestone payment is always less than one year 1.
(iii) Project management services
Project management services are recognised for services rendered based on the stage of completion during pre and post contract for each project.
(iv) Parking services rendered
Revenue from parking services are upon the delivery of the service to the customers.
(v) Cleaning services
Services are recognised upon completion of monthly services based on price stated in the predetermined agreement between company and the customer.
(vi) Provision of site and facilities management
Income from services are recognised based on services rendered during the financial year.
116 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.25 Revenue and other income (cont’d)
(b) Other income
(i) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.
(ii) Interest income Interest income is recognised using the effective interest method.
(iii) Dividend income Dividend income is recognised when the Group’s right to receive payment is established.
2.26 Income taxes
(a) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
(i) where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
(ii) in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
(i) where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
(ii) in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
117 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.26 Income taxes (cont’d)
(b) Deferred tax (cont’d)
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
2.27 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 33, including the factors used to identify the reportable segments and the measurement basis of segment information.
2.28 Share capital and share issuance expenses
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. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
2.29 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group.
2.30 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:
(i) In the principal market for the asset or liability, or (ii) In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to by the Group.
118 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
2. Summary of significant accounting policies (cont’d)
2.30 Fair value measurement (cont’d)
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 circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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:
(i) Level 1 – Quoted (unadjusted) market prices in active markets for identical assets of liabilities. (ii) Level 2 – Valuation techniques for the lowest level input that is significant to the fair value measurement is directly or indirectly observable. (iii) Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the assets or liabilities and the level of the fair value hierarchy as explained above.
3. Significant accounting judgements and estimates
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
3.1 Judgements made in applying accounting policies
There are no critical judgements made by management in the process of applying the Group’s accounting policies that may have significant effect on the amounts recognised in the financial statements.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Impairment of receivables
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s and Company’s receivables at the reporting date is disclosed in Note 21.
119 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
3. Significant accounting judgements and estimates (cont’d) 3.2 Key sources of estimation uncertainty (cont’d) (b) Impairment of goodwill Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are given in Note 20.
(c) Deferred tax assets Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies. Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depends on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.
4. Revenue
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Provision of site and facilities management 246,413 211,333 - - Project management services 46,468 18,344 - - Sale of properties 11,192 17,065 - - Management fees receivable from subsidiaries - - 13,288 7,239 Others 52 3,000 - -
304,125 249,742 13,288 7,239
5. Interest income
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Interest income on: - late payment 214 87 1 8 - deposits with licensed banks 76 105 25 2
290 192 26 10
120 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
6. Dividend income from subsidiaries
Company 2018 2017 RM’000 RM’000
Dividend income from subsidiaries 680 1,334
7. Other income
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Net gain on sales of investments properties - 979 - 979 Net gain on sales of subsidiaries 1,944 - 9,322 - Net gain on sales of investment - 18,774 - - Rental income from investment properties 248 289 228 289 Discount received 22 - 22 - Creditors write back - 5,950 - 3,956 Interest on late payment 24 324 - - Tender documents 11 - - - Reversal of impairment of other receivables (Note 21 (b)) 13 1,331 891 275 Interest receivable from subsidiaries - - 2,966 2,850 Others 5,689 1,314 6,833 1,766
7,951 28,961 20,262 10,115
8. Finance costs
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Interest expense on: - Term loans 142 44 - - - Finance leases 498 355 3 4 - Overdrafts 560 197 - - - Advance from holding company 52 274 52 274 - Bank charges - 475 - -
Total finance costs 1,252 1,345 55 278
121 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
9. Employee benefits expenses
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Wages, salaries and bonus 80,448 49,554 8,972 12,779 Social security contributions 147 568 53 53 Contributions to defined contribution plan 2,837 3,978 935 980 Training 659 623 61 32 Other benefits 1,447 1,325 405 238
Employee benefits expense (Note 10) 85,538 56,048 10,426 14,082
Less: Employees’ benefits expenses included in cost of sales (51,785) (21,914) - -
33,753 34,134 10,426 14,082
Included in employee benefits expense of the Group and the Company are executive director’s remuneration amounting to RM2,452,000 (2017: RM1,576,000) and RM2,050,000 (2017: RM1,576,000) respectively.
10. Profit/ (Loss) before tax The following items have been included in arriving at profit/ (loss) before tax:
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Auditors’ remuneration: - Statutory audit fees 433 438 65 67 Employee benefits expense (Note 9) 85,538 56,048 10,426 14,082 Directors’ remuneration: - Executive director (Note 11) 2,452 1,576 2,050 1,576 - Non-executive directors’ remuneration (Note 11) 584 615 584 615 Depreciation of property, plant and equipment (Note 14) 5,559 6,499 79 433 Rental expense: - office, warehouse and house rental 1,585 2,506 627 614 - computer and equipment 339 106 133 82 Depreciation of investment properties (Note 16) 36 42 36 42
Impairment loss on financial assets: - trade receivables (Note 21(a)) - 1,555 - - - other receivables (Note 21(b)) - 1,811 - - Unrealised foreign exchange loss (3) 5 - - Realised foreign exchange loss/ (income) 41 4 - (2) Unrealised foreign exchange gain 1 (547) - -
122 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
11. Directors’ remuneration
The details of remuneration receivable by directors of the Company during the financial year are as follows:
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Executive: Salaries, bonus and other emoluments 1,914 1,200 1,535 1,200 Fees 343 304 343 304 Defined contribution plan 195 72 172 72
Total executive directors’ remuneration (including benefits-in-kind) (Note 10) 2,452 1,576 2,050 1,576
Non-Executive: Fees 524 555 524 555 Other emoluments 60 60 60 60
Total non-executive directors’ remuneration (including benefits-in-kind) (Note 10) 584 615 584 615 Total directors’ remuneration 3,036 2,191 2,634 2,191
The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:
Number of directors 2018 2017
Executive directors: Below RM500,000 2 - RM500,001 - RM1,000,000 - - RM1,000,001 - RM1,500,000 - - RM1,500,001 - RM2,000,000 1 1
Non-Executive directors: Below RM50,000 2 - RM50,001 - RM100,000 5 6 RM100,001 - RM200,000 1 1
123 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
12. Income tax expense
Major components of income tax expense
The major components of income tax expense for the years ended 31 December 2018 and 2017 are:
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Statement of comprehensive income: Current income tax: - Malaysian income tax 6,735 2,192 133 - - Foreign income tax 714 991 - - - Over provision in respect of previous years (874) (1,912) - (1,912)
Income tax expense recognised in profit or loss 6,575 1,271 133 (1,912)
Reconciliation between tax expense and accounting profit
A reconciliation of income tax expense applicable to profit/ (loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Company is as follows:
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Profit/ (loss) before tax 26,116 19,128 17,812 (366)
Tax at Malaysian statutory tax rate of 24% (2017:24%) 6,268 4,592 4,275 (88)
Adjustments: Non-deductible expenses 8,714 7,663 1,016 1,157 Income not subject to taxation (3,803) (5,482) (3,731) (1,047) Utilisation of business loss (3,730) (3,533) (1,427) - Utilisation of previously unrecognised tax losses, capital allowances and other temporary differences - (57) - (22) Over provision of income tax in respect of previous years (874) (1,912) - (1,912)
Income tax expense/ (income) recognised in profit or loss 6,575 1,271 133 (1,912)
124 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
13. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.
The Company does not have dilutive potential ordinary shares for years ended 31 December 2018 and 2017.
The following reflects the profit and share data used in the computation of basic earnings per share for the years ended 31 December:
Group 2018 2017 RM’000 RM’000
Profit net of tax attributable to owners of the parent used in the computation of basic earnings per share 19,120 17,015
No. of No. of shares shares ‘000 ‘000
Weighted average number of ordinary shares for basic earnings per share computation 318,371 310,371
Basic profit per share attributable to owners of the parent (sen per share) 6.01 5.48
125 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d) - - 316 (82) (50) 316 632 Total (787) 4,358 5,559 (1,386) 22,717 (1,192) (1,741) 95,520 96,863 70,178 73,514 RM’000 ------1,114 3,061 1,114 (1,947) Capital work-in RM’000 progress ------(80) (20) 416 (69) (69) 372 4,332 4,183 3,484 3,767 Motor vehicles RM’000 - - - - - 221 721 405 273 (554) (178) (479) (167) 2,234 8,738 8,770 10,794 11,004 RM’000 and office Computer equipment - - - - 22 (50) 849 (82) (71) and 286 178 167 (462) (170) 2,722 2,571 1,753 1,722 fittings RM’000 Furniture - - - 632 (69) 316 316 (107) 3,097 1,947 4,540 16,102 (1,811) (1,639) 68,262 71,388 51,822 54,654 RM’000 Plant and Plant machinery ------400 Site 254 164 4,512 4,766 4,202 4,366 and RM’000 renovations infrastructure ------56 179 235 1,602 1,837 1,837 RM’000 land and Freehold buildings Additions Disposals Disposal of subsidiaries assets / (from) to Transfer differences Translation depreciation Accumulated loss impairment Accumulated year for the charge Depreciation loss Impairment Disposals Disposal of subsidiaries assets / (from) to Transfer differences Translation depreciation Accumulated loss impairment Accumulated Property, plant and equipment plant Property, 2018 Group Cost 1 January 2018 At 31 December 2018 At depreciation Accumulated 1 January 2018 At 31 December 2018 At amount carrying Net 14. 126 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d) - 316 (91) 158 158 Total (114) (961) 6,499 70,178 25,026 (1,266) (1,968) 88,105 10,763 95,520 64,731 RM’000 ------(5) 467 387 3,061 2,212 3,061 Capital work-in RM’000 progress ------848 110 371 (101) (101) 3,484 4,323 4,332 3,214 Motor vehicles RM’000 - - - - 1 (2) (2) 586 481 (192) (244) 8,738 2,056 8,503 10,401 10,794 RM’000 and office Computer equipment - - - - (1) 969 (10) (10) and 112 170 (432) (473) 1,753 3,053 2,722 2,066 fittings RM’000 Furniture - 5 316 (79) 158 158 (102) (928) (152) 4,913 7,669 51,822 16,124 61,618 68,262 47,140 RM’000 Plant and Plant machinery 9 ------83 310 Site 510 4,202 4,429 4,512 3,683 and RM’000 renovations infrastructure ------54 179 125 1,658 2,069 1,736 1,837 (1,968) RM’000 land and Freehold buildings Additions Disposals / (from) to Transfer differences Translation Adjustment depreciation Accumulated loss impairment Accumulated year for the charge Depreciation loss Impairment Disposals differences Translation depreciation Accumulated loss impairment Accumulated Property, plant and equipment (cont’d) and equipment plant Property, 2017 Group Cost 1 January 2017 At 31 December 2017 At depreciation Accumulated 1 January 2017 At 31 December 2017 At amount carrying Net 14. 127 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
14. Property, plant and equipment (cont’d)
Office Equipment Furniture and and Motor Computers Fittings Renovations Vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000
2018 Company
Cost At 1 January 2018 186 384 1,309 144 2,023 Additions 16 5 - - 21 At 31 December 2018 202 389 1,309 144 2,044
Accumulated depreciation At 1 January 2018 44 61 1,301 87 1,493 Depreciation charge for the year 21 20 8 30 79 At 31 December 2018 65 81 1,309 117 1,572
Net carrying amount 137 308 - 27 472
2017 Company
Cost At 1 January 2017 156 384 1,309 144 1,993 Additions 30 - - - 30 At 31 December 2017 186 384 1,309 144 2,023
Accumulated depreciation At 1 January 2017 26 42 934 58 1,060 Depreciation charge for the year 18 19 367 29 433 At 31 December 2017 44 61 1,301 87 1,493
Net carrying amount 142 323 8 57 530
Assets held under finance lease
During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM7,891,000 (2017: RM8,577,000) by means of finance leases.
The net carrying amount of property, plant and equipment of the Group held under finance lease at the reporting date was RM6,582,000 (2017: RM7,794,000).
Leased assets are pledged as security for the related finance lease liabilities (Note 29).
128 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
15. Inventories
Group 2018 2017 2016 RM’000 RM’000 RM’000
Non-current Land held for property development (Note (a)) 60,755 59,709 227,342
Current Property development costs (Note (b)) 15,378 16,522 - Finished goods, raw materials and consumable stores (Note (c)) 7,718 3,195 4,000
23,096 19,717 4,000
Total inventories 83,851 79,426 231,342
(a) Land held for property development
Freehold Development Development Land Rights Costs Total RM’000 RM’000 RM’000 RM’000
Group
At 1 January 2018 37,386 - 22,323 59,709 Additions - - 1,046 1,046
At 31 December 2018 37,386 - 23,369 60,755
At 1 January 2017 39,152 105,406 82,784 227,342 Recognised in profit & loss - (70,550) (56,607) (127,157) Reclassification during the year (1,766) (34,856) (3,854) (40,476)
At 31 December 2017 37,386 - 22,323 59,709
129 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
15. Inventories (cont’d)
(b) Property development costs
Freehold Development Development Land Rights Costs Total RM’000 RM’000 RM’000 RM’000
Group At 31 December 2018 Cumulative property development costs
At 1 January 2018 2,104 1,712 46,668 50,484 Costs incurred during the year - - 6,129 6,129 Reversal from completed projects - - (891) (891)
At 31 December 2018 2,104 1,712 51,906 55,722
Cumulative costs recognised in profit or loss At 1 January 2018 (603) (1,528) (31,831) (33,962) Recognised during the year (375) - (4,573) (4,948) Reclassification of development cost - - 3,000 3,000 Transfer to inventory (248) (184) (4,002) (4,434)
At 31 December 2018 (1,226) (1,712) (37,406) (40,344)
Property development costs at 31 December 2018 878 - 14,500 15,378
Group At 31 December 2017 Cumulative property development costs
At 1 January 2017 - 1,712 15,188 16,900 Costs incurred during the year 2,104 - 30,589 32,693 Reversal from completed projects - - 891 891
At 31 December 2017 2,104 1,712 46,668 50,484
Cumulative costs recognised in profit or loss At 1 January 2017 - (1,528) (15,372) (16,900) Recognised during the year (603) - (7,500) (8,103) Transfer to inventory - - (8,959) (8,959)
At 31 December 2017 (603) (1,528) (31,831) (33,962)
Property development costs at 31 December 2017 1,501 184 14,837 16,522
130 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
15. Inventories (cont’d)
(c) Finished goods, raw materials and consumable stores
Group 2018 2017 2016 RM’000 RM’000 RM’000
Cost Cleaning machinery and equipment 60 70 62 Chemicals 82 92 92 Developed properties held for sale 5,906 1,470 2,362 Uniforms 58 74 22 Materials and consumables 1,001 503 244 Parking materials 611 986 1,218
7,718 3,195 4,000
During the year, the amount of inventories recognised as an expense in cost of sales of the Group was RM50,279,000 (2017: RM26,373,000).
16. Investment properties
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Cost
At 1 January 89,478 3,585 1,792 3,585 Acquired through derecognition of other investment - 87,686 - - Disposal during the year - (1,793) - (1,793)
At 31 December 89,478 89,478 1,792 1,792
Accumulated depreciation
At 1 January 301 531 301 531 Depreciation charge for the year (Note 10) 36 42 36 42 Disposal during the year - (272) - (272)
At 31 December 337 301 337 301
Net carrying amount 89,141 89,177 1,455 1,491
Fair value 90,186 90,186 2,500 2,500
Fair value of investment properties has been determined based on valuations performed by accredited independent valuers. The valuation is based on the comparison method of valuation.
131 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
16. Investment properties (cont’d)
Title to investment properties of the Company is presently registered in the name of the developer.
Fair value hierarchy disclosure for investment properties have been provided in Note 30(c).
17. Investment in subsidiaries
Company 2018 2017 2016 RM’000 RM’000 RM’000
Unquoted shares, at cost In Malaysia 69,396 67,896 67,896 Addition - 1,500 - Disposal (3,617) - -
65,779 69,396 67,896
Impairment losses (38,663) (40,563) (40,563)
27,116 28,833 27,333
The Company disposed investment in Healthcare Technical Services Sdn. Bhd. on 21 November 2018. Meanwhile, Kesang Industries Sdn. Bhd. and Metro Equipment Systems (M) Sdn. Bhd. are under company voluntary liquidation.
Proportion (%) of ownership interest Name Principal activities 2018 2017
i) Held by the Company and incorporated in Malaysia: Damansara Realty Management Services Sdn. Bhd. Management services to holding 100 100 and related companies and general insurance business
Damansara Realty (Pahang) Sdn. Bhd. Property holding and 80 80 development
Metro Parking (M) Sdn. Bhd. Parking operation and the 100 100 provision of related consultancy services
Kesang Properties Sdn. Bhd. Property development (inactive) 100 100
132 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
17. Investment in subsidiaries (cont’d)
Proportion (%) of ownership interest Name Principal activities 2018 2017
i) Held by the Company and incorporated in Malaysia (cont’d): Tebing Aur Sdn. Bhd. Contract management and 100 100 construction (inactive)
Healthcare Technical Services Sdn. Bhd. Project management and - 70 engineering maintenance services
HC Duraclean Sdn. Bhd. Franchising of professional care 75 75 and cleaning services and sales of machinery, equipment and cleaning products
TMR Urusharta (M) Sdn. Bhd. Business of the real estate 95 95 services, involved in general services, facility management, project consultant and project management
Damansara Galaxy Sdn. Bhd. Management services (inactive) 100 100
Damansara Prospects Sdn. Bhd. (formerly known as Lease, hire purchase and loan 100 100 Kesang Leasing Sdn. Bhd.) financing (inactive)
Kesang Industries Sdn. Bhd. Investment holding (under - 100 members’ liquidation)
Damansara Technology Sdn. Bhd. (formerly known as Quarrying (inactive) 100 100 Damansara Forest Products (Malaysia) Sdn. Bhd.)
JOLS Construction Sdn. Bhd. Construction, refurbishment, 100 100 inspection and sanitisation service (inactive)
Damansara Realty Management (Timber Operations) Timber operations and its 100 100 Sdn. Bhd. related activities (inactive)
Damansara Realty Properties Sdn. Bhd. Property development and 100 100 construction works (inactive)
Kesang Kastory Enterprise Sdn. Bhd. Importation and distribution of 95 95 food stuffs (inactive)
Kesang Trading Sdn. Bhd. Property development and 100 100 trading of office equipment (inactive)
Damansara Realty Constructions Sdn. Bhd. Manufacturing, wholeselling 100 100 and trading of pharmaceutical products (inactive)
133 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
17. Investment in Subsidiaries (cont’d)
Proportion (%) of ownership interest Name Principal activities 2018 2017
i) Held by the Company and incorporated in Malaysia (cont’d): Damansara Realty Land Sdn. Bhd. Sand extraction and trading 100 100 (inactive)
DHealthcare Centre Sdn. Bhd. Healthcare service provider 51 51 (inactive)
Damansara Urban Sdn. Bhd. To carry on the business of 100 100 general merchants, traders, suppliers, factors, brokers, commission and general agents etc (general traders) (inactive)
ii) Held through subsidiaries and incorporated in Malaysia: Damansara Realty (Johor) Sdn. Bhd. Property development 100 100
Damansara Realty (Terengganu) Sdn. Bhd. Property development 100 100
Kesang Construction & Engineering Sdn. Bhd. The business of general 100 100 contracting (inactive)
Kesang Equipment Hire Sdn. Bhd. Buying, selling and renting of 100 100 machinery (inactive)
Kesang Quarry Sdn. Bhd. Quarrying (inactive) 70 70
HTS International Ltd Consultancy and constructing of 100 100 hospitals, supply and trading of medical equipment
Pedas Quarry Sdn. Bhd. Quarrying (inactive) 55 55
TMR LC Services Sdn. Bhd. Business refreshment 70 70
Metro Equipment Systems (M) Sdn. Bhd. Trading of parking and other - 100 related services (under members’ liquidation)
Metro Parking (Sabah) Sdn. Bhd. Parking operator and other 100 100 transport related services
Smart Parking Management Systems Sdn. Bhd. Trading of parking and other 100 100 related equipment (inactive)
M.N. Koll (M) Sdn. Bhd. Building management and 100 90 maintenance services
TMR ACMV Services Sdn. Bhd. Trading and services of air 100 100 conditioning products services
TMR Koll Sdn. Bhd. Engineering consultancy services 100 100 (inactive)
134 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
17. Investment in Subsidiaries (cont’d)
Proportion (%) of ownership interest Name Principal activities 2018 2017
ii) Held through subsidiaries and incorporated in Malaysia (cont’d): Harta Facilities Management Sdn. Bhd. Facility management and 100 100 consultancy services
Damansara PMC Services Sdn. Bhd. (formerly known as Property and land development, 100 100 DRP Construction Sdn. Bhd.) healthcare facilities consultancy services and human capital development and training
** DAC Properties Sdn. Bhd. Development of building 30 56 projects
DAC Land Sdn. Bhd. Investment properties and 100 100 property development.
iii) Held through subsidiaries and incorporated in oversea:
Country of incorporation
** Metro Parking (S) Pte. Ltd. Singapore Parking operator and 70 70 consultancy services
** Metro Parking (B) Sdn. Bhd. Brunei Parking operator and other 100 75 transport related services
** Metro Parking Management Philippines Parking operator and other 100 75 (Philippines) Inc. transport related services
** Metro Parking (HK) Limited Hong Kong Parking operator, consultancy 55 55 services and transport related services (struck off)
** Metro Parking Services (India) India Parking operator, consultancy 100 100 Private Limited services and transport related services
** Healthcare Technical Services Papua New Consultancy services of 45 45 (PNG) Limited Guinea hospitals, infrastructure as well as facilities management and hospital management services
** Audited by a firm other than Messrs. Jamal, Amin & Partners
135 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
18. Deferred tax
Deferred tax as at 31 December relates to the following:
As at Recognised As at Recognised As at 1 January in profit 31 December in profit 31 December 2017 or loss 2017 or loss 2018 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Deferred tax liabilities: Property, plant and equipment 480 53 533 1,207 1,740
Deferred tax assets: Others (779) 249 (530) (2,794) (3,324)
(299) 302 3 (1,587) (1,584)
Group 2018 2017 RM’000 RM’000
Presented after appropriate offsetting as follows: Deferred tax liabilities 1,740 533 Deferred tax assets (3,324) (530)
(1,584) 3
Deferred tax assets have not been recognised in respect of the following items:
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Unused tax losses 89,688 82,990 84,356 7,991 17,623 20,053 Unabsorbed capital allowances 217 124 446 - 33 254
89,905 83,114 84,802 7,991 17,656 20,307
Unrecognised Tax Losses
At the reporting date, the Group has unused tax losses and unabsorbed capital allowances that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of recoverability. The availability of unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the tax authority.
136 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
19. Other investments
Group/Company 2018 2017 2016 RM’000 RM’000 RM’000
Non-current Available-for-sale financial assets: - equity instruments (quoted in Malaysia) 51 51 51
Market value of quoted investments 377 167 129
20. Goodwill on consolidation
2018 2017 2016 RM’000 RM’000 RM’000
Group
Cost At 1 January and 31 December 3,050 3,050 3,049 (Disposal)/Addition (1,620) - 1
At 31 December 1,430 3,050 3,050
Accumulated impairment At 1 January and 31 December 1,640 1,640 1640 Disposal (1,098) - -
At 31 December 542 1,640 1,640
Net carrying amount 888 1,410 1,410
Impairment testing of goodwill
Goodwill arising from business combinations has been allocated to two individual cash-generating units (CGU) for impairment testing as follows:
- Healthcare services segment - Property services segment
The carrying amounts of goodwill allocated to each CGU are as follows:
2018 2017 2016 RM’000 RM’000 RM’000
Goodwill Healthcare services segment - 523 523 Property services segment 888 887 887
Total 888 1,410 1,410
137 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
20. Goodwill on consolidation (cont’d)
The recoverable amounts of the CGUs have been determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period. The pre-tax discount rate applied to the cash flow projections and the forecasted growth rates used to extrapolate cash flows beyond the five-year period are as follows:
Growth rates Pre-tax discount rates 2018 2017 2018 2017
Healthcare services segment 5.0% 5.0% 9.2% 9.2% Property services segment 11.0% 11.0% 9.0% 9.0%
The calculations of value in use for the CGUs are most sensitive to the following assumptions:
Budgeted gross margins – Gross margins are based on average values achieved in the three years preceding the start of the budget period. These are increased over the budget period for anticipated efficiency improvements.
Growth rates – The forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the CGUs.
Pre-tax discount rates – Discount rates reflect the current market assessment of the risks specific to each CGU. This is the benchmark used by management to assess operating performance and to evaluate future investment proposals.
Market share assumptions - These assumptions are important because, as well as using industry data for growth rates (as noted above), management assesses how the CGU’s position, relative to its competitors, might change over the budget period.
138 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
21. Trade and other receivables
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Current Trade receivables Third parties 44,569 42,478 20,971 - - - Less: Impairment (1,449) (1,555) (4,322) - - -
Trade receivables, net 43,120 40,923 16,649 - - -
Other receivables Income tax recoverable 2,352 1,932 283 - 283 283 Amounts due from subsidiaries - - - 189,451 176,138 175,332 Deposits 7,456 1,438 870 187 183 221 Others 52,946 38,999 34,767 12,849 3,333 479
62,754 42,369 35,920 202,487 179,937 176,315
Less: Allowance for impairment - Amounts due from subsidiaries - - - (111,676) (112,567) (113,002) - Others (712) (1,811) (754) - - (27)
(712) (1,811) (754) (111,676) (112,567) (113,029)
Other receivables, net 62,042 40,558 35,166 90,811 67,370 63,286
Total trade and other receivables 105,162 81,481 51,815 90,811 67,370 63,286
139 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
21. Trade and other receivables (cont’d)
(a) Trade receivables
Trade receivables are non-interest bearing and generally ranges from 14 to 90 days (2017: 14 to 90 days) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables are as follows:
Group 2018 2017 2016 RM’000 RM’000 RM’000
Neither past due nor impaired 13,813 16,924 3,814 1 to 30 days past due not impaired 10,343 9,899 3,476 31 to 60 days past due not impaired 10,532 2,926 1,902 61 to 90 days past due not impaired 1,988 1,518 1,100 91 to 120 days past due not impaired 5,308 4,059 1,796 More than 121 days past due not impaired 1,136 5,597 4,561 29,307 23,999 12,835
Impaired 1,449 1,555 4,322
44,569 42,478 20,971
Receivables that are neither past due nor impaired
31% (2017: 40%) of trade receivables of the Group or RM13,813,000 (2017: RM16,924,000) that is neither past due nor impaired.
None of the Group’s and Company’s trade receivables that are neither past due nor impaired has been renegotiated during the financial year.
Receivables that are past due but not impaired
The Group has trade receivables amounting to RM29,307,000 (2017: RM23,999,000) respectively that are past due atthe reporting date but not impaired.
Although these receivables have exceeded the credit terms granted to them, the directors are reasonably confident that all debts can be recovered within the next 12 months.
140 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
21. Trade and other receivables (cont’d)
(a) Trade receivables (cont’d)
Receivables that are impaired
The Group’s and Company’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Individually impaired Trade receivables - nominal amounts 1,449 1,555 4,322 - - - Allowance for impairment (1,449) (1,555) (4,322) - - -
------
Movement in allowance accounts:
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 January 1,555 4,322 27,010 - 8,217 8,217 Charge for the year (Note 10) - 1,555 1,541 - - - Written-off allowances (106) (4,322) (24,229) - (8,217) -
At 31 December 1,449 1,555 4,322 - - 8,217
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 not secured by any collateral or credit enhancements.
(b) Other receivables
Amounts due from subsidiaries are unsecured, bears interest of 4% per annum and is repayable on demand.
Other receivables that are impaired
At the reporting date, debts due from subsidiaries that are in net liabilities position amounted to RM189,451,000 (2017: RM176,138,000) of which provision for impairment of RM111,676,000 (2017: RM112,567,000) had been made.
141 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
21. Trade and other receivables (cont’d)
(b) Other receivables (cont’d)
Other receivables that are impaired (cont’d)
Movement in allowance accounts:
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 January 1,811 754 7,166 112,567 113,029 115,014 Charge for the year (Note 10) - 1,811 - - - - Reversal of impairment (Note 7) (13) (1,331) (248) (891) (275) - Written-off allowances (1,086) 577 (6,164) - (187) (1,985)
At 31 December 712 1,811 754 111,676 112,567 113,029
22. Other current assets
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Prepayments 2,335 13,781 7,012 148 11 206 Amount due from customers for contract 10,985 10,985 9,444 10,248 10,248 10,248
13,320 24,766 16,456 10,396 10,259 10,454
Less: Impairment - Prepayments (1,928) (1,928) (823) - - - - Amounts due from customers on contract (10,685) (10,685) (10,248) (10,248) (10,248) (10,248)
(12,613) (12,613) (11,071) (10,248) (10,248) (10,248)
Total other current assets 707 12,153 5,385 148 11 206
142 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
22. Other current assets (cont’d)
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Gross amount due from customers for contract Construction contract costs incurred to date 36,272 36,272 36,273 21,329 21,329 21,329
Attributable profits 7,710 7,710 7,710 6,640 6,640 6,640
43,982 43,982 43,983 27,969 27,969 27,969
Less: Progress billings (44,787) (44,787) (44,787) (27,969) (27,969) (27,969)
(805) (805) (804) - - -
Presented as: Gross amount due from customers for contract work (805) (805) (804) - - -
23. Cash and cash equivalents
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cash at banks and on hand 23,152 21,246 15,822 222 795 354 Short term deposits with licensed banks 3,968 6,226 9,850 - - -
Total cash and bank balances (Note 32) 27,120 27,472 25,672 222 795 354 Less: Bank overdrafts (Note 24) (2,525) (8,363) 140 - - - Less: Deposits pledged with banks (2,862) (3,826) (4,638) - - -
Cash and cash equivalents 21,733 15,283 21,174 222 795 354
Included in deposits with licensed banks of the Group are deposits amounting to RM2,862,000 (2017: RM3,826,000) which are pledged as security for bank facilities and bank guarantees.
143 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
23. Cash and cash equivalents (cont’d)
Short-term deposits are made for varying periods of between one day and one year depending on the immediate cash requirements of the Group and the Company, and earn interests at the respective short-term deposit fixed rates. The weighted average effective interest rates at the reporting date for the Group and the Company are as below:
Group Company 2018 2017 2016 2018 2017 2016 % % % % % %
Licensed banks 2.59 2.71 2.38 2.92 2.94 2.94
24. Loans and borrowings
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Current Secured: Term loan at BLR+2.0% p.a. 178 1,117 4,136 - - - Obligations under finance leases (Note 29(b)) 1,862 3,994 962 13 13 13 Bank overdrafts (Note 23) 2,525 8,363 (140) - - -
4,565 13,474 4,958 13 13 13
Unsecured: Advances from a non- controlling shareholder of a subsidiary 1,805 1,805 1,805 - - - Advance from ultimate holding company 3,185 3,633 7,467 3,185 3,633 7,467
4,990 5,438 9,272 3,185 3,633 7,467
9,555 18,912 14,230 3,198 3,646 7,480
Non-current Secured: Redeemable Convertible Notes (Note 27) - 2,184 - - 2,184 - Term loan at BLR+2.0% p.a. (Note 30(a)) 4,854 6,604 776 - - - Obligations under finance leases (Note 29(b)) 2,510 3,587 4,237 42 60 78 7,364 12,375 5,013 42 2,244 78
Total loans and borrowings (Note 32) 16,919 31,287 19,243 3,240 5,890 7,558 144 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
24. Loans and borrowings (cont’d)
The remaining maturities of the loans and borrowings are as follows:
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
On demand or within one year 9,555 18,912 14,230 3,198 3,646 7,480 More than 1 year and less than 2 years 4,940 4,372 4,037 21 19 18 More than 2 years and less than 5 years 1,248 3,729 723 21 40 38 5 years or more 1,176 4,274 253 - 2,186 22
16,919 31,287 19,243 3,240 5,891 7,558
Advances from a non-controlling shareholder of a subsidiary
The advances from a non-controlling shareholder of a subsidiary, Uniphoenix Corporation Bhd. (in liquidation) are unsecured, non-interest bearing and are repayable on demand.
Advance from holding company
The advance from the holding company is unsecured, bears interest of 2.5% per annum and is repayable on demand.
Obligations under finance leases
These obligations are secured by a charge over the leased assets (Note 14). The weighted average discount rate implicit in the lease is 5.5% (2017: 5.5%) per annum.
145 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
25. Trade and other payables
Group Company 2018 2017 2016 2018 2017 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Current Trade payables Third parties 26,091 31,728 29,845 97 162 3,903 Other payables Amounts due to subsidiaries - - - 39,696 35,895 31,858 Deposits received - Interest - - 8,815 - - - Other payables 35,166 9,406 125,899 4,732 4,186 - Accruals 15,547 34,168 17,144 308 3,445 837 Others 62,669 44,035 45,595 5,726 4,454 8,374
113,382 87,609 197,453 50,462 47,980 41,069
Total trade and other payables 139,473 119,337 227,298 50,559 48,142 44,972
Non-current Other payables Other payables - 9,850 - - - - Total trade and other payables (Note 32) 139,473 129,187 227,298 50,559 48,142 44,972 Add: Loans and borrowings (Note 24) 16,919 31,287 19,243 3,240 5,890 7,558
Total financial liabilities carried at amortised cost 156,392 160,474 246,541 53,799 54,032 52,530
146 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
25. Trade and other payables (cont’d)
(a) Trade payables
These amounts are non-interest bearing. Trade payables are normally settled on 30 to 90 days (2017: 30 to 90 days) terms. Non-current trade payables are repayable after 12 months on installment basis.
(b) Other payables
In 2016, amount due to Johor City Development Sdn. Bhd. (JCDSB) was part of the total consideration of RM180 million for Johor Corporation (JCorp) and JCDSB agreeing to appoint Damansara Realty Johor Sdn. Bhd. (DRJ), a subsidiary of the Company, as the developer for Taman Damansara Aliff (TDA). On 1 July 2011, JCDSB had granted an extension of time of DRJ’s appointment as the developer of TDA for 5 years until 30 September 2016. Accordingly, the term of repayment of amount due to JCDSB was modified to be repayable within 5 years until 30 September 2016. It was repayable on when and as is where is basis subject that DRJ shall undertake to set aside a proportion of proceeds arising from the land sale or development of properties in TDA, for the purpose of settlement of the said amount.
On 14 October 2016, the Company had entered into a settlement agreement with JCorp, JCDSB and Johor Land Berhad (JLand) for the proposed settlement of amount owing to JCDSB. On 11 April 2017, the Company had obtained shareholders’ approval on the proposed settlement of amount owing to JCDSB.
On 22 November 2017, the Company received the approval from the relevant authorities and accordingly the proposed settlement has been completed in accordance with the terms and conditions of the agreed agreement, and the amount due to JCDSB was fully settled.
(c) Amounts due to subsidiaries
These amounts are unsecured, repayable on demand and non-interest bearing except for an amount of RM3,495,000 (2017: RM1,631,000) which bears interest at the effective average rate of 4.0% (2017: 6.6%) per annum.
147 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d) - - - - 41 (547) (1,925) (1,884) (1,378) (1,925) (1,378) reserve RM’000 Exchange ------deficit Merger RM’000 (18,568) (18,568) (18,568) (18,568) (18,568) - - - - - 85 56 85 85 85 (29) Capital reserve RM’000 ------Amount 41,603 41,603 41,603 41,603 reserve RM’000 Revaluation ------156 156 (156) Share RM’000 premium - - - 156 500 4,000 RM’000 155,341 159,341 154,685 155,341 154,685 fully paid) (Issued and Share capital Share - - - - ’000 8,000 1,000 shares 310,371 318,371 309,371 310,371 309,371 ordinary fully paid) Number of (Issued and Share capital Share properties Share capital, share premium, capital reserve, merger deficit and exchange reserve exchange and deficit merger reserve, capital premium, share capital, Share Group Issued and fully paid 2018 beginning At of RCN Conversion (loss)/profit comprehensive Total end of 2018 At 2017 beginning At capital share to Transfer of investment revaluation Arising from of RCN Conversion loss comprehensive Total end of 2017 At 2016 end of 2016 At 26. 148 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
26. Share capital, share premium, capital reserve, merger deficit and exchange reserve (cont’d)
Number of ordinary shares Amount 2018 2017 2018 2017 ‘000 ‘000 RM’000 RM’000
Company Issued and fully paid-up At 1 January Ordinary shares 310,371 309,371 155,341 154,685
Ordinary shares 310,371 309,371 155,341 154,685
Issuance of new shares under - conversion of redeemable notes 8,000 1,000 4,000 500
Transfer from share premium - - - 156
At 31 December 318,371 310,371 159,341 155,341
The Companies Act, 2016 (2016 Act) which came into effect from 31 January 2017 has repealed the Companies Act, 1965. The 2016 Act has abolished the concept of par or nominal value of shares and hence, the share premium, capital redemption reserve and authorised capital will be abolished. In accordance with Section 618 (2) of the 2016 Act, the amount standing to the credit of the share premium account has become part of the Company’s share capital. There is no impact on the number of ordinary shares in issue of 309,371,264 or the entitlement of the holders of the Company’s ordinary shares.
(a) Merger deficit This represents the difference between the consideration paid and the share capital of the acquired companies.
(b) Capital reserve This represents reserve arising from bonus issue by a subsidiary.
27. Redeemable convertible notes (RCN)
On 8 November 2017, the shareholders of the Company at the Extraordinary General Meeting approved the issuance of RCN with an aggregate principal amount of up to RM150 million under a Redeemable Convertible Notes programme convertible into a maximum of 300 million ordinary shares of minimum conversion price at RM0.50 each in the Company, representing approximately 39.26% of the enlarge issued share capital. The RCN has a tenure of 3 years up to December 2020 (Maturity Date).
The proceeds from the issuance are utilised for financing of property development activities and working capital requirements as follows: Proposed Utilised in Utilised in Purpose Utilisation 2017 2018 Balance RM’000 RM’000 RM’000 RM’000
Financing of property development activities 77,000 - - 77,000 Working capital requirements 61,000 (2,161) (4,635) 54,204 Estimated expenses in relation to the Proposed Notes Issued 12,000 (839) (365) 10,796
150,000 (3,000) (5,000) 142,000
149 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
27. Redeemable convertible notes (RCN) (cont’d) The salient terms of the RCN are as follows:- (a) The RCN bear interest from the respective dates on which they are issued and registered at the rate of 0.1% perannum, payable semi-annually in arrears on 30 June and 31 December in each year with the last payment of interest being made on the Maturity Date; (b) The price at which each Conversion Share shall be issued upon conversion of the Notes be: (i) In respect of Tranche 1 Notes, 80% of the average closing price per Share on any three (3) consecutive business days as selected by the Noteholder(s) during the forty-five (45) business days immediately preceding the relevant conversion date on which shares were traded on the Main Market of Bursa Securities; (ii) In respect of Tranche 2 Notes, 82% of the average closing price per Share on any three (3) consecutive business days as selected by the Noteholder(s) during the forty-five (45) business days immediately preceding the relevant conversion date on which Shares were traded on the Main Market of Bursa Securities; (iii) In respect of Tranche 3 Notes, 85% of the average closing price per Share on any three (3) consecutive business days as selected by the Noteholder(s) during the forty-five (45) business days immediately preceding the relevant conversion date on which Shares were traded on the Main Market of Bursa Securities; (iv) In respect of Tranche 4 Notes, 90% of the average closing price per Share on any three (3) consecutive business days as selected by the Noteholder(s) during the forty-five (45) business days immediately preceding the relevant conversion date on which Shares were traded on the Main Market of Bursa Securities. (c) All RCN are convertible at the option of the Company (except Tranche 1), subject to the terms of the Redemption Option at any time after the issue date of the Notes and up to the day falling seven (7) days prior to the Maturity Date; (d) If the Conversion Price (as elected by the Noteholder(s)) is less than or equal to 65% of the average of the daily traded volume weighted average price (VWAP) of the Company for the 45 market days prior to the relevant closing date in respect of each first sub-tranche of the respective tranches of the Notes. The redemption option offers the Company a contractual right to seek redemption (as opposed to acceding to the Subscriber’s right to convert of the Notes) in the event the market price is below a certain threshold as agreed between the parties; (e) The Subscriber no longer has a right of conversion and is only paid a redemption amount with a 8% per annum interest for the Notes in the event the Company decides to redeem the Notes. The 65% threshold and 8% per annum interest are figures negotiated and accepted by the Company and Subscriber from a commercial perspective in such an eventuality after the parties taking into consideration the Subscriber’s cost of funding and expected yields; (f) Any RCN not converted at maturity date may be redeemed by the Company at 100% of their principal amount. The liability component and equity component of the RCN are allocated at initial recognition as follows:-
Group/Company 2018 2017 RM’000 RM’000
At 1 January 2,184 - Issue during the financial year – liability component 5,000 3,000 Conversion to ordinary shares during the financial year (4,000) (500) Equity component on borrowing (127) (316) Reversal of equity component on borrowing 443 - Repayment (3,500) -
At 31 December - 2,184
On 7 November 2018, RCN was mutually terminated and RM3.5 million RCN was redeemed.
150 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
28. Related party transactions (a) Sale and purchase of goods and services In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:
Related companies within Seaview Holdings Sdn. Bhd.:
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Interest on advances 52 274 52 274
Related companies within Damansara Realty Berhad:
Management fees payable to holding company - - 13,288 7,239 Interest income from subsidiary companies - - 2,966 2,850 Dividend income from subsidiary companies - - 680 1,334 Intercompany sales 3,785 3,428 - -
(b) Compensation of key management personnel
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Salaries and other emoluments 4,080 3,702 2,878 1,504 Defined contribution plan 537 365 384 72
4,617 4,067 3,262 1,576
29. Commitments
(a) Operating lease commitments – as lessee
The Group has entered into commercial leases on office buildings. These leases have an average tenure of three years with no renewal option or contingent rent provision included in the contract. There are no restrictions placed upon the Group by entering into these leases.
Future minimum rentals payable under non-cancellable operating leases at the reporting date are as follows:
Group 2018 2017 2016 RM’000 RM’000 RM’000
Not later than 1 year 64,903 65,425 54,276 Later than 1 year but not later than 5 years 67,481 74,655 115,075 Later than 5 years - 3 54
132,384 140,083 169,405
151 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
29. Commitments (cont’d)
(b) Finance lease commitments
The Group has finance leases for certain motor vehicles and plant and machinery (Note 14). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
Group 2018 2017 2016 RM’000 RM’000 RM’000
Minimum lease payments:
Not later than 1 year 1,862 3,994 1,103 Later than 1 year but not later than 2 years 1,928 2,445 3,521 Later than 2 years but not later than 5 years 881 2,319 810 Later than 5 years - 44 237
Total minimum lease payments 4,671 8,802 5,671 Less: Amounts representing finance charges (299) (1,221) (472)
Present value of minimum lease payments 4,372 7,581 5,199
Present value of payments: Not later than 1 year 1,862 3,272 962 Later than 1 year but not later than 2 years 2,196 2,145 3,281 Later than 2 years but not later than 5 years 314 2,122 741 Later than 5 years - 42 215
Present value of minimum lease payments 4,372 7,581 5,199 Less: Amount due within 12 months (Note 24) (1,862) (3,994) (962)
Amount due after 12 months (Note 24) 2,510 3,587 4,237
152 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
30. Fair value of financial instruments
(a) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value
Group Carrying Fair amount value RM’000 RM’000
At 31 December 2018 Financial liabilities: Non-current Loans and borrowings (non-current) (Note 24) - Term loan 4,854 -
At 31 December 2017 Financial liabilities: Non-current Loans and borrowings (non-current) (Note 24) - Term loan 6,604 -
(b) Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:
Note Other investments (current) 19 Trade and other receivables (current) 21 Loans and borrowings (current) 24 Trade and other payables (current) 25
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to their short-term nature.
The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.
The fair values of non-current loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.
153 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
30. Fair value of financial instruments (cont’d)
(c) Fair value measurement
The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities.
Quantitative disclosures fair value measurement hierarchy for asset as at 31 December 2018
Carrying amount Fair value Fair value disclosures Date of valuation RM’000 RM’000
Investment properties (Note 16) 31 December 2014 89,141 90,186
Fair value disclosure of investment properties are categorised in Level 2 within the fair value hierarchy where the valuation involved significant directly or indirectly observable inputs.
31. Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk and interest rate risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee provides independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position.
Information regarding credit enhancements for trade and other receivables is disclosed in Note 21.
154 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
31. Financial risk management objectives and policies (cont’d)
(a) Credit risk (cont’d)
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the business segment of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:
Group 2018 2017 RM’000 % in total RM’000 % in total
By business segments:
Property development 5,975 14 8,426 21 Integrated facility management 36,398 84 24,612 60 Project management consultancy 747 2 7,885 19
43,120 100 40,923 100
Financial assets that are neither past due nor impaired
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 21. Deposits with banks and other financial institutions that are neither past due nor impaired are placed with or entered into with reputable financial institutions.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 21.
(b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.
155 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
31. Financial risk management objectives and policies (cont’d)
(b) Liquidity risk (cont’d)
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.
On demand or within One to Over five one year five years years Total RM’000 RM’000 RM’000 RM’000
Group
At 31 December 2018 Financial liabilities: Trade and other payables 139,473 - - 139,473 Loans and borrowings 9,555 6,188 1,176 16,919
Total undiscounted financial liabilities 149,028 6,188 1,176 156,392
At 31 December 2017 Financial liabilities: Trade and other payables 119,337 - 9,850 129,187 Loans and borrowings 18,912 8,101 4,274 31,287
Total undiscounted financial liabilities 138,249 8,101 14,124 160,474
Company
At 31 December 2018 Financial liabilities: Trade and other payables 50,559 - - 50,559 Loans and borrowings 3,198 42 - 3,240
Total undiscounted financial liabilities 53,757 42 - 53,799
At 31 December 2017 Financial liabilities: Trade and other payables 48,142 - - 48,142 Loans and borrowings 3,646 59 2,185 5,890
Total undiscounted financial liabilities 51,788 59 2,185 54,032
156 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
31. Financial risk management objectives and policies (cont’d)
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. At the reporting date, the Group and Company do not have floating rate borrowings.
(d) Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group entities, primarily RM, Singapore Dollar and Philippines Peso. The management believes that the foreign exchange risk is minimal.
It is not the Group’s policy to hedge its transactional foreign currency risk exposure.
32. Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. No changes were made in the objectives, policies or processes during the years ended 31 December 2018 and 31 December 2017.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio below 70%. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to the owners of the parent.
Group Company 2018 2017 2018 2017 Note RM’000 RM’000 RM’000 RM’000
Loans and borrowings 24 16,919 31,287 3,240 5,890 Trade and other payables 25 139,473 129,187 50,559 48,142 Cash and bank balances 23 (27,120) (27,472) (222) (795) Net debt 129,272 133,002 53,577 53,237
Equity attributable to the owners of the parent, representing total capital 170,178 147,403 66,412 45,049
Capital and net debt 299,450 280,405 119,989 98,286
Gearing ratio 43% 47% 45% 54%
157 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
33. Segment information
For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows:
(i) Property and Land Development (PLD) - the development of residential and commercial properties.
(ii) Integrated Facility Management (IFM) - provision of property services comprising of general services, parking operation, trading of parking equipments and the provision of related consultancy services.
(iii) Project Management Consultancy (PMC) - facility management, project management and consultant, construction management, energy management services, hospital planning, maintenance services and manpower services.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
(a) Inter-segment revenues are eliminated on consolidation.
(b) Other material non-cash expenses consist of the following items as presented in the respective notes to the financial statements:
2018 2017 Note RM’000 RM’000
Impairment loss on financial assets: - trade receivables 21 - 1,555 - other receivables 21 - 1,811
- 3,366
(c) Additions to non-current assets consist of:
2018 2017 Note RM’000 RM’000
Investment properties 16 - 87,686 Property, plant and equipment 14 4,358 10,763
4,358 98,449
158 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d) - 280 192 166 2017 2,195 2,195 1,345 1,271 17,857 17,857 98,449 RM’000 249,742 249,742 249,462 249,462 316,726 316,726 161,007 - - - 290 2018 2,164 2,164 1,252 6,575 4,358 4,358 Per consolidated Per 19,541 19,541 RM’000 financial statements financial 304,125 304,125 304,125 304,125 332,961 332,961 158,132 C B A Note ------2017 (2,240) (2,249) RM’000 (10,667) (10,667) (190,423) (294,700) ------eliminations 2018 (680) (202) (9,242) Adjustments and Adjustments RM’000 (10,766) (10,766) (208,674) (314,008) - - - - - 2 1 3 906 2017 (104) 1,128 1,128 40,736 40,736 RM’000 114,528 114,528 ------1 2 Others 25 101 2018 39,971 39,971 RM’000 101,421 101,421 - - - - 43 39 146 120 381 2017 8,200 8,200 11,247 11,247 11,247 11,247 20,797 20,797 RM’000 - - - - 3 26 118 141 600 754 consultancy 2018 7,450 7,450 7,450 7,450 12,905 12,905 RM’000 Project Management Management Project - - 9 20 42 27 166 2017 20,066 20,066 13,578 20,066 20,066 87,776 RM’000 231,360 231,360 179,302 - - - - 7 43 58 (18) 2018 Development (2,502) 11,192 11,192 11,192 11,192 RM’000 Property and Land Property 237,697 237,697 188,140 - - 117 2017 3,708 3,708 1,532 1,055 3,140 3,472 10,604 10,604 99,645 99,645 RM’000 221,857 221,857 218,149 218,149 115,175 - - 195 2018 Management 1,871 1,871 6,420 3,796 3,796 1,188 4,327 12,981 Integrated Facility Facility Integrated RM’000 289,279 289,279 285,483 285,483 142,938 115,811 - - 10 30 474 278 2017 7,239 7,239 7,239 1,334 1,547 (1,912) 99,081 99,081 54,032 RM’000 - - 26 55 28 680 116 133 2018 6,970 6,970 6,970 6,970 17,679 17,679 53,863 53,863 Holding Company Holding RM’000 120,275 120,275 amortisation company assets non-current Segment information (cont’d) information Segment Results: Total revenue Total income Interest income Dividend and Depreciation expense Tax Revenue: customers External Inter-segment expense Interest of loss associate Share profit/(loss) Segment Assets: to Additions/(disposal) Segment assets Segment liabilities Segment 33. 159 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
34. Material litigations
(a) Bungsar Hill Holdings Sdn. Bhd. (BHH) v Damansara Realty Berhad (DBhd)
On 4 February 2016, the Federal Court (FC) registrar fixed the matter for Hearing on 12 May 2016 whereby on thesaid date, the FC granted BHH’s leave to appeal on one single question of law only pertaining to the payment of interest on land acquisition compensation monies.
The suit was fixed for case management on 18 November 2016 and on the said date the parties’ solicitors had informed the FC that the Grounds of Judgment (GOJ) from the Court of Appeal (COA) had not been obtained despite the several requests made. The FC also informed that the appeal cannot be heard until the GOJ had been obtained from the COA.
During the case management on 3 April 2018, the FC directed the parties to file their written submissions and bundle of authorities on or before 10 May 2018 and fixed the Hearing date of the appeal proper on 24 May 2018.
On 24 May 2018, the case proceeded with the Hearing of the Appeal Proper in the FC. However, on 8 June 2018, the Chairman of the panel, Yang Arif Tan Sri Ahmad Bin Haji Maarop had recused himself from further hearing the appeal due to a conflict of interest. As such, the matter was then fixed for case management on 28 June 2018 pending the empanelling of a new Chairman.
Upon the empanelling of a new panel of judges chaired by the Chief Justice, Yang Amat Arif Tan Sri Datuk Sri Panglima Richard Malanjum, a Re-Hearing was then fixed on 2 October 2018 where the FC heard the submissions by the parties.
On 13 March 2019, the FC delivered its decision in favour of DBhd and dismissed BHH’s appeal with cost of RM30,000.00 to be paid by BHH to DBhd.
The FC, in delivering their judgment, held that the FC recognizes only the late payment charges under the Land Acquisition Act 1960 (LAA) but does not recognize interest, which was sought by BHH at approximately RM8.0 million, on the grounds that the imposition of interest as a liability is not in tandem with the spirit and intention of the LAA.
(b) Om Cahaya Mineral Asia Berhad (OMC) v Damansara Realty (Pahang) Sdn. Bhd. (DRP)
This case is concerning a legal suit filed by OMC against DRP for unlawful termination of contract in relation toits alleged appointment to carry out mining works at DRP’s land in Kuantan, Pahang.
On 26 April 2018, the Judge directed the parties to file the pre-trial court paper and to exchange the witness statement by the next case management fixed on 7 May 2018. The Kuala Lumpur High Court (KLHC) further vacated the trial date on 10 May 2018 due to the Malaysian General Election. The trial date was then fixed on 24 May 2018 and 25 May 2018.
On 22 May 2018, KLHC had vacated the trial date on 25 May 2018 and further fixed another trial date on 28 May 2018.
KLHC then fixed and proceeded with full trial of the case on 24 May 2018, 28 May 2018, 8 June2018and 2 July 2018 wherein the parties had called their witnesses to KLHC and closed its case thereafter. The KLHC directed the parties to file and exchange their written submissions before 15 July 2018, with allowance to be given for the chance to file reply submission, if any. KLHC further fixed a clarification date on 15 August 2018, and the decision date on 29 August 2018. On 28 August 2018,KLHC notified the parties on the postponement of the decision date to 19 October 2018.
160 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
34. Material litigations (cont’d)
(b) Om Cahaya Mineral Asia Berhad (OMC) v Damansara Realty (Pahang) Sdn. Bhd. (DRP) (cont’d)
During the clarification and decision in KLHC on 19 October 2018, the Court had:-
(i) dismissed OMC’s claim for loss of profit in the sum of USD85 million (RM366,656,000.00 as at the date of the summons); (ii) dismissed OMC’s claim for specific performance of the contract; (iii) declared that the termination of the agreement was unlawful; (iv) ordered the special damages being the purported wasted expenditure claimed by OMC to be fixed for assessment based on the documents and any other evidences produced during the trial; and (v) not awarded any damages to OMC apart from the special damages which must be proven by OMC during the assessment proceedings as mentioned above.
On 5 November 2018, KLHC held that the special damages which was to be assessed by KLHC would be limited to the wasted expenditure as pleaded by OMC in the Statement of Claim.
During the hearing on the assessment of damages on 19 December 2018, KLHC allowed the DRP’s requests for a time to file a short reply to OMC’s submission and fixed a new hearing date on 12 March 2019, which was later postponedto 29 March 2019.
Further, following KLHC’s decision on 19 October 2018, DRP had filed an appeal in the Court of Appeal (COA) on 5 November 2018. DRP had updated the COA, during the case management on 10 December 2018, the status of the Record of Appeal (ROA) and the GOJ which was still pending in KLHC.
The COA then directed the parties to update the Court on the status of filing of the ROA and the release oftheGOJ during the case management on 31 January 2019, which was later postponed to 20 March 2019.
(c) Express Rail Link Sdn. Bhd. (ERL) v Semasa Parking Sdn. Bhd. (SPSB) & Metro Parking (M) Sdn. Bhd (MPM)
On 1 November 2018, MPM was served with a Third Party Notice dated 31 October 2018 pertaining to KLHC legal suit between ERL and SPSB over a dispute on the alleged outstanding profit-sharing amount within the period from January 2013 to June 2014.
The Third Party Notice was filed by SPSB who was seeking for indemnification from MPM over ERL’s claim, in the event KLHC finds the SPSB liable.
MPM had filed their memorandum of appearance in the KLHC on 13 November 2018.
During the case management on 10 December 2018, KLHC directed all parties to update KLHC on (i) the close of pleadings, and (ii) any interlocutory application filed by the parties prior to the closing of the pleading, during the case management which was fixed on 11 February 2019.
On 11 February 2019, the KLHC had directed (i) SPSB to file and served its Statement of Reply, if any; (ii) the parties to file all interlocutory application, if any; and (iii) for the parties to update any amicable settlement reached, if any. KLHC then fixed another case management on 27 March 2019 for the parties to update the status of the said directions.
161 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
35. Explanation of transition to MFRSs
As stated in note 2.1, these are the first financial statements of the Group and of the Company prepared in accordance with MFRSs. The accounting policies set out in note 2 have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2018, the comparative information presented in these financial statements for the financial year ended 31 December 2017 and in the preparation of the opening MFRS statement of financial position at 1 January 2017 (the Group’s date of transition to MFRSs)
In preparing the opening consolidated statement of financial position at 1 January 2017, the Group has adjusted amounts reported previously in financial statements prepared in accordance with previous FRSs. An explanation of how the transition from previous FRSs to MFRSs has affected the Group’s financial position, financial performance and cash flows is set out as follows:
(a) Reconciliation of financial position
Group - 1 January 2017 Effects of transition to FRSs MFRSs MFRSs RM’000 RM’000 RM’000
Assets Non-current assets Property, plant and equipment 23,216 - 23,216 Land held for development 227,342 (227,342) - Inventories - 227,342 227,342 Investment properties 3,054 - 3,054 Deferred tax assets 779 - 779 Other investments 51 - 51 Goodwill on consolidation 1,410 - 1,410 255,852 - 255,852
Current assets Inventories 4,000 - 4,000 Trade and other receivables 51,815 - 51,815 Other current assets 5,385 - 5,385 Cash and bank balances 25,672 - 25,672 86,872 - 86,872
Total assets 342,724 - 342,724
162 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
35. Explanation of transition to MFRSs (cont’d)
(a) Reconciliation of financial position (cont’d)
Group - 1 January 2017 (cont’d) Effects of transition to FRSs MFRs MFRs RM’000 RM’000 RM’000 Equity and liabilities Current liabilities 241,528 - 241,528 Non-current liabilities 5,493 - 5,493 Total liabilities 247,021 - 247,021
Net assets 95,703 - 95,703
Equity attributable to owners of the parent 87,969 - 87,969 Non-controlling interests 7,734 - 7,734 Total equity 95,703 - 95,703
Total equity and liabilities 342,724 - 342,724
Group - 31 December 2017
Assets Non-current assets Property, plant and equipment 25,026 - 25,026 Land held for development 59,709 (59,709) - Inventories - 59,709 59,709 Investment properties 89,177 - 89,177 Deferred tax assets 530 - 530 Other investments 51 - 51 Goodwill on consolidation 1,410 - 1,410 175,903 - 175,903
Current assets Property development cost 16,522 (16,522) - Inventories 3,195 16,522 19,717 Trade and other receivables 81,481 - 81,481 Other current assets 12,153 - 12,153 Cash and bank balances 27,472 - 27,472 140,823 - 140,823
Total assets 316,726 - 316,726
163 Establishing Sustainable Growth
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
35. Explanation of transition to MFRSs (cont’d) (a) Reconciliation of financial position (cont’d)
Group - 31 December 2017 (cont’d) Effects of transition to FRSs MFRs MFRs RM’000 RM’000 RM’000 Equity and liabilities Current liabilities 138,249 - 138,249 Non-current liabilities 22,758 - 22,758 Total liabilities 161,007 - 161,007
Net assets 155,719 - 155,719
Equity attributable to owners of the parent 147,403 - 147,403 Non-controlling interests 8,316 - 8,316 Total equity 155,719 - 155,719
Total equity and liabilities 316,726 - 316,726
(b) Material adjustments to the statements of comprehensive income for 2017
There are no material differences between the statement of comprehensive income presented under MFRSs and the statement of comprehensive income presented under FRSs.
(c) Material adjustments to the statements of cash flows for 2017
There are no material differences between the statement of cash flows presented under MFRSs and the statement of cash flows presented under FRSs.
36. Significant event during financial year
Disposal of subsidiaries
On 14 May 2018, the Company entered into a sale and purchase agreement with Johor Corporation (JCorp) for the proposed sale of 175,000 ordinary shares in Healthcare Technical Services Sdn. Bhd. (HTS) representing 70% equity interest in HTS for a total consideration of approximately RM11.04 million. On 14 November 2018, all the condition precedent for the agreement were fulfilled.
164 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
Notes to the financial statements For the financial year ended 31 December 2018 (cont’d)
36. Significant event during financial year (cont’d)
Disposal of subsidiaries (cont’d)
Details of the assets, liabilities and net cash outflow arising from the disposal of the above mentioned subsidiary by the Company during the financial year ended 31 December 2018 are as follows: At date of disposal RM’000
Assets Property, plant and equipment 404 Trade and other receivables 17,053 Tax recoverable 536 Fixed deposits 1,000 Cash and bank balances 1,822
20,815 Liabilities Deferred tax liabilities 85 Trade and other payables 7,146 7,231
13,584 Non-controlling interest (3,966) Realisation of goodwill (523)
Net liabilities 9,095 Consideration receivable (11,039)
Gain on disposal (1,944)
Cash consideration received - Less : Cash and cash equivalent of subsidiaries disposed 2,822
Net cash outflow (2,822)
165 Establishing Sustainable Growth
LIST OF PROPERTIES HELD BY THE GROUP As at 31 December 2018
Net Book Age of Value Date of Title / Particulars of Location Tenure Area Description Building RM’000 Valuation
Lot Nos. 17423, 17424, 17427, Freehold 504.29 9 parcels of agricultural land 17431, 17434, 17439, Mukim Acres with development potential Sungai Karang, Kuantan, Pahang
Lot Nos. 5995, 5997 & 5998, Mukim Beserah, Kuantan, Pahang
Lot Nos. 2389 to 2402, Freehold 0.56 14 parcels of vacant Mukim of Beserah, Kuantan, Acres subdivided commercial Pahang terraced shop/office plot 31 December N/A 37,386 Lot Nos. 4139 to 4160 and Freehold 2.6 49 parcels of subdivided 2014 4162 to 4188, Mukim of Acres residential terrace / Beserah, Kuantan, Pahang semi-detached plot
Lot Nos. 2189 and 2190, Mukim Freehold 0.27 2 parcels of vacant of Beserah, Kuantan, Pahang Acres subdivided residential semi-detached plot
Lot No. 2388, Mukim of Freehold 1.013 A parcel of commercial land Beserah, Kuantan, Pahang Acres designated for petrol station use
Level 14, Menara Safuan, Freehold 5,122 Office building 20 years 1,491 31 December No. 80, Jalan Ampang, sq. ft. 2014 Kuala Lumpur
No. 7, Jalan Hujung Permatang Freehold 1,600 Double storey shophouse N/A 220 N/A Satu 26/25A, Section 26, sq. ft. 40000 Shah Alam, Selangor
No. 47, Blok J, Jalan Aliff 4 Freehold 4,814 Shop office N/A 1557 N/A Taman Damansara Aliff, sq. ft. 81200 Johor Bahru, Johor
No. 33, Blok H Jalan Aliff 4, Freehold 4,814 Shop office N/A 1591 N/A Taman Damansara Aliff, sq. ft. 81200 Johor Bahru, Johor
166 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
LIST OF PROPERTIES HELD BY THE GROUP As at 31 December 2018 (cont’d)
Net Book Age of Value Date of Title / Particulars of Location Tenure Area Description Building RM’000 Valuation
PTD 170455 - PTD 170522, Freehold 2.90 68 parcels of vacant Mukim Tebrau, Johor Bahru, Acres subdivided commercial Johor terraced shop/office plot
PTD 196064, Mukim Tebrau, Freehold 442,784 A parcel of “Building” land Johor Bahru, Johor sq. ft. designated for commercial building
PTD 153151, Mukim Tebrau, Freehold 67,213 A parcel of commercial land Johor Bahru, Johor sq. ft.
PTD 162934, Mukim Tebrau, Freehold 23,180 A parcel of commercial land 3 November Johor Bahru, Johor sq. ft. N/A 87,686 2016 PTD 153149, Mukim Tebrau, Freehold 8,078 A parcel of “Building” land Johor Bahru, Johor sq. ft. designated for kindergarden use
PTD 153256, Mukim Tebrau, Freehold 10,692 A parcel of “Building” land Johor Bahru, Johor sq. ft. designated for kindergarden use
PTD 138523, Mukim Tebrau, Freehold 43,560 A parcel of commercial land Johor Bahru, Johor sq. ft. designated for petrol station use
The above properties are valued at cost. These properties will be revalued at recoverable amount if there is any significant impairment. 167 Establishing Sustainable Growth
SHAREHOLDINGS STATISTICS As at 18 March 2019
Total Number of Issued Shares of the Company 318,371,260 ordinary shares, with voting right of one vote per ordinary share
Analysis by Size of Holdings
Size of Holdings No. of Holders % No. of Shares %
1 - 99 1,333 3.975 50,135 0.015
100 – 1,000 21,104 62.933 11,772,484 3.697
1,001 – 10,000 9,897 29.513 28,712,681 9.018
10,001 – 100, 000 1,078 3.214 32,586,671 10.235
100,001 – 15,918,562 (*) 120 0.357 57,384,377 18.013
15,918,563 and above (**) 2 0.005 187,900,912 59.019
TOTAL 33,534 100 318,371,260 100
Remark : * - less than 5% of issued shares ** - 5% And above of issued shares
List of Top 30 Holders
(Without aggregating securities from different securities accounts belonging to the same registered holder)
No Name Holdings %
1. Seaview Holdings Sdn. Bhd. 157,816,580 49.569
2. Sindora Berhad 30,084,332 9.449
3. Kulim (Malaysia) Berhad 13,879,926 4.359
4. UOB Kay Hian Nominees (Asing) Sdn. Bhd. 4,955,800 1.556 Exempt An For UOB Kay Hian Pte Ltd (A/C Clients)
5. Datuk Tay Hock Tiam 3,250,000 1.020
6. Datin Leung Kit Man 1,509,068 0.473
7. Kenanga Nominees (Asing) Sdn. Bhd. 1,124,500 0.353 Exempt An For Phillip Securities Pte Ltd (Client Account)
8. Harun bin Kassim 1,100,900 0.345
9. Kenanga Nominees (Tempatan) Sdn. Bhd. 1,050,000 0.329 Pledged Securities Account For Khaled bin Mohamad Aroff
10. Kenanga Nominees (Tempatan) Sdn. Bhd. 949,200 0.298 Pledged Securities Account For Muhamad Hapiz bin Othman
11. Wong Ten Yong 919,900 0.288
12. Tan Beng Nee 840,000 0.263
13. Kek Hing Kok 820,000 0.257
168 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
SHAREHOLDINGS STATISTICS As at 18 March 2019 (cont’d)
No Name Holdings %
14. Tam Soon Sian 800,000 0.251
15. Rashid bin Sihes 767,800 0.241
16. Maybank Nominees (Tempatan) Sdn. Bhd. 676,300 0.212 Pledged Securities Account For Chow Ah Kau
17. Inter-Pacific Equity Nominees (Tempatan) Sdn. Bhd. 584,000 0.183 Pledged Securities Account For Soh Jin Gee
18. Ng Say Piyu 510,000 0.160
19. Alliancegroup Nominees (Tempatan) Sdn. Bhd. 500,000 0.157 Pledged Securities Account For Lim Lian Seng (800394)
20. Cimsec Nominees (Tempatan) Sdn. Bhd. 500,000 0.157 CIMB Bank For Saw Kok Leng (My1931)
21. Gan Seong Keat 500,000 0.157
22. Public Nominees (Tempatan) Sdn. Bhd. 500,000 0.157 Pledged Securities Account For Tam Seng @ Tam Seng Sen (E-Pts)
23. Datuk Tay Hock Tiam 498,025 0.156
24. Ong Seng Chye 490,500 0.154
25. Maybank Nominees (Tempatan) Sdn. Bhd. 450,000 0.141 Pledge Securities Account For Seow Liew Wee
26. Rashid bin Sihes 418,900 0.131
27. Selina Ng Li Yin 416,000 0.130
28. Public Nominees (Tempatan) Sdn. Bhd. 404,100 0.126 Pledge Securities Account For Tan Tian Sang @ Tan Tian Song (E-Ppg)
29. Sam Fong @ Chan Sam Fong 400,000 0.125
30. Lee Chee Kian 387,900 0.121
Total No. of Holders : 30 Total Holdings : 227,103,731 Total Percentage (%) : 71.332
169 Establishing Sustainable Growth
SHAREHOLDINGS STATISTICS As at 18 March 2019 (cont’d)
Substantial Shareholders
Name Direct Indirect No. of shares held % held No. of shares held % held
Seaview Holdings Sdn. Bhd. 157,816,580 49.57 - -
Dato’ Daing A Malek bin Daing A Rahaman - - 157,816,580# 49.57
Sindora Berhad 30,084,332 9.45 - -
Kulim (Malaysia) Berhad 13,879,926 4.36 30,084,3321 9.45
Johor Corporation (JCorp) - - 43,964,2582 13.81
Notes:- 1. Deemed interested by virtue of its shareholdings in Sindora Berhad pursuant to Section 7 of the Companies Act, 2016. 2. Deemed interested by virtue of its shareholdings in Kulim (Malaysia) Berhad pursuant to Section 7 of the Companies Act, 2016. # Dato’ Daing A Malek bin Daing A Rahaman deemed interested by virtue of his shareholdings in Seaview Holdings Sdn. Bhd. pursuant to Section 7 of the Companies Act, 2016.
Analysis of Shareholders
Size of Holdings No. of Holders % No. of Shares %
Malaysian - Bumiputra 16,913 50.44 236,072,891 74.15
- Others 16,319 48.66 71,850,569 22.57
Foreigner 302 0.90 10,447,800 3.28
TOTAL 33,534 100 318,371,260 100
Directors’ Shareholdings
No Name Holdings %
1. Dato’ Ahmad Zahri bin Jamil 20,000 0.006 2. Ts. Brian Iskandar bin Zulkarim - - 3. Azhari bin Abdul Hamid - - 4. Haji Abdullah bin Md Yusof - - 5. Dato’ Mohd Aisom bin Omar - - 6. Shahrizam bin A Shukor - - 7. Vinie Chong Pui Ling - -
Summary Total No. of Holders : 1 Total Holdings : 20,000 Total Percentage (%) : 0.006
170 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
SHAREHOLDINGS STATISTICS - WARRANT As at 18 March 2019
Total No. of Issued Warrants 154,685,556 Warrants issued on the basis of one (1) warrant for every two (2) existing ordinary shares
Exercise Price RM0.58 per warrant
Analysis by Size of Holdings- Warrant
Size of Holdings No. of Holders % No. of Warrants %
1 - 99 1,465 4.429 38,871 0.025
100 – 1,000 26,521 80.189 10,036,697 6.488
1,001 – 10,000 4,563 13.796 12,345,559 7.981
10,001 – 100, 000 452 1.366 13,608,016 8.797
100,001 – 7,734,276 (*) 70 0.211 24,705,957 15.971
7,734,277 and above (**) 2 0.006 93,950,456 60.736
TOTAL 33,073 100 154,685,556 100
Remark : * - less than 5% of issued warrants ** - 5% And above of issued warrants
List of Top 30 Holders - Warrant
(Without aggregating securities from different securities accounts belonging to the same registered holder)
No Name Holdings %
1. Seaview Holdings Sdn. Bhd. 78,908,290 51.012 2. Sindora Berhad 15,042,166 9.724 3. Kulim (Malaysia) Berhad 6,939,963 4.486 4. UOB Kay Hian Nominees (Asing) Sdn. Bhd. 1,557,900 1.007 Exempt An For UOB Kay Hian Pte Ltd (A/C Clients) 5. Datuk Tay Hock Tiam 1,100,000 0.711 6. Datin Leung Kit Man 739,534 0.478 7. Maybank Nominees (Tempatan) Sdn. Bhd. 600,000 0.387 Pledge Securities Account For Baskaran A/L Arunasalam Pillay 8. Harun bin Kassim 550,450 0.355 9. Toh Tiam Hwat 528,000 0.341 10. Maybank Nominees (Tempatan) Sdn. Bhd. 500,000 0.323 Mohamad Alfalah bin Zakaria 11. Kenanga Nominees (Tempatan) Sdn. Bhd. 474,600 0.306 Pledged Securities Account For Muhamad Hapiz bin Othman 12. Wong Ten Yong 459,950 0.297 13. Tan Seng Yong 402,000 0.259 14. Tan Beng Nee 387,500 0.250 15. Rashid bin Sihes 383,900 0.248
171 Establishing Sustainable Growth
SHAREHOLDINGS STATISTICS - WARRANT As at 18 March 2019 (cont’d)
No Name Holdings %
16. Ng Sie Kee 300,000 0.193 17. Sam Fong @ Chan Sam Fong 300,000 0.193 18. Teoh Yen Ni 300,000 0.193 19. Inter-Pacific Equity Nominees (Tempatan) Sdn. Bhd. 292,000 0.188 Pledged Securities Account For Soh Jin Gee 20. Lim Poh Chuan 260,000 0.168 21. Ng Say Piyu 255,000 0.164 22. Gan Seong Keat 250,000 0.161 23. Datuk Tay Hock Tiam 249,012 0.160 24. Ong Seng Chye 245,250 0.158 25. Public Nominess (Tempatan) Sdn. Bhd. 240,000 0.155 Pledge Securities Account For Ser Toh Chon Chien (E-Bpt) 26. Shum Sow Lin 220,000 0.142 27. Tan Seng Yong 215, 000 0.138 28. Rashid bin Sihes 209,450 0.135 29. Selina Ng Li Yin 208,000 0.134 30. Lim Keng Jin 200,000 0.129
Total No. of Holders : 30 Total Holdings : 112,317,965 Total Percentage (%) : 72.610
Substantial Shareholders - Warrant
Name Direct Indirect No. of Warrants % held No. of Warrants % held held held
Seaview Holdings Sdn. Bhd. 78,908,290 51.01 - -
Dato’ Daing A Malek bin Daing A Rahaman - - 78,908,290# 51.01
Sindora Berhad 15,042,166 9.72 - -
Kulim (Malaysia) Berhad 6,939,963 4.49 15,042,1661 9.72
JCorp - - 21,982,1292 14.21
Notes:- 1. Deemed interested by virtue of its shareholdings in Sindora Berhad pursuant to Section 7 of the Companies Act, 2016. 2. Deemed interested by virtue of its shareholdings in Kulim (Malaysia) Berhad pursuant to Section 7 of the Companies Act, 2016. # Dato’ Daing A Malek bin Daing A Rahaman deemed interested by virtue of his shareholdings in Seaview Holdings Sdn. Bhd. pursuant to Section 7 of the Companies Act, 2016.
172 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
SHAREHOLDINGS STATISTICS - WARRANT As at 18 March 2019 (cont’d)
Analysis of Shareholders - Warrant
Size of Holdings No. of Holders % No. of Warrants %
Malaysian - Bumiputra 16,811 50.83 116,899,228 75.57
- Others 15,965 48.27 34,193,880 22.11
Foreigner 297 0.90 3,592,448 2.32
TOTAL 33,073 100 154,685,556 100
Directors’ Shareholdings - Warrant
None of the Directors have any interest in the warrants.
173 Establishing Sustainable Growth NOTICE OF 57TH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the 57th Annual General Meeting (AGM) of Damansara Realty Berhad (4030-D) (DBhd or the Company) will be held at Kingfisher 1, Level 3, Fraser Place Puteri Harbour Residensi & Hotel Marina, Persiaran Tanjung, Pengkalan Puteri, 79100 Iskandar Puteri, Johor Darul Takzim on Wednesday, 19 June 2019 at 11.00 a.m to transact the following business:
AGENDA
1. To receive the Audited Financial Statements for the financial year ended 31 December 2018 (Explanatory Note 1) together with the Directors and Auditors Report thereon.
2. To consider and if thought fit, to pass the following Ordinary Resolutions in accordance with the Companies Act, 2016 and the Company’s Constitution:
(a) “THAT Haji Abdullah bin Md Yusof, the Director retiring by rotation in accordance with the Resolution 1 Section 205 of the Companies Act, 2016, be and is hereby re-elected as a Director of the Company”.
(b) “THAT Ts. Brian Iskandar bin Zulkarim, the Director retiring in accordance with the Article Resolution 2 68.2 of the Company’s Constitution, be and is hereby re-elected as a Director ofthe Company”.
(c) “THAT Azhari bin Abdul Hamid, the Director in accordance with the Article 68.2 of the Resolution 3 Company’s Constitution, be and is hereby re-elected as a Director of the Company”.
(d) “THAT Vinie Chong Pui Ling, the Director retiring in accordance with the Article 68.2 of the Resolution 4 Company’s Constitution, be and is hereby re-elected as a Director of the Company”.
3. To approve the payment of Directors’ Fees to Non-Executive Directors amounting to RM480,000 Resolution 5 for the period from 20 June 2019 until the next AGM of the Company in 2020.
4. To approve the payment of Directors’ Remuneration (excluding Directors’ Fees) to the Non- Resolution 6 Executive Directors up to an amount of RM150,000 for the period from 20 June 2019 until the (Explanatory Note 2) next AGM of the Company in 2020.
5. To re-appoint Messrs. Jamal, Amin & Partners as the Company’s Auditors for the financial year Resolution 7 ending 31 December 2019 until the conclusion of the next AGM and to authorise the Directors to determine their remuneration.
174 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
th Notice of 57 annual general meeting (cont’d)
AS SPECIAL BUSINESS To consider and, if thought fit, pass the following resolutions:
6. ORDINARY RESOLUTION
AUTHORITY TO ALLOT SHARES IN GENERAL PURSUANT TO SECTIONS 75 AND 76 OF THE Resolution 8 COMPANIES ACT, 2016 (the Act) (Explanatory Note 3)
“THAT pursuant to Sections 75 and 76 of the Companies Act, 2016 and subject to the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time and upon such terms and conditions and for such proposes as the Directors, may at their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being, and that the Directors be and are hereby also empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next AGM of the Company.”
7. ORDINARY RESOLUTION
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR THE EXISTING RECURRENT Resolution 9 RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE AND PROPOSED (Explanatory Note 4) NEW SHAREHOLDERS’ MANDATE FOR THE ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (Proposed Shareholders’ Mandate)
“THAT, subject always to the Act and Main Market Listing Requirements, of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and/or its subsidiary companies to renew the mandate for the existing Recurrent Related Party Transactions and to obtain new mandate for the additional Recurrent Related Party Transactions of a Revenue or Trading Nature from the shareholders of the Company for the Company and/or its subsidiary companies to enter into all arrangements and/or transactions involving the interest of Directors, substantial shareholders or persons connected with Directors and/or substantial shareholders of the Company and/or its subsidiary companies (Related Parties) as outlined in the Section 2.2 of the Circular to Shareholders dated 30 April 2019 (the Circular to Shareholders), which are necessary for the day-to-day operations of the Company and/or its subsidiary companies, and are within the ordinary course of business of the Company and/or its subsidiary companies (Proposed Shareholders’ Mandate), subject further to the following:
i) the transactions are in the ordinary course of business for the day-to-day operations and normal commercial terms which are not more favorable to the related parties than those generally available to the public and not to the detriment of the minority shareholders; and
ii) disclosure will be made in the Annual Report of the aggregate value of transactions conducted pursuant to the Proposed Shareholders’ Mandate during the financial year including amongst others, the following information: - a) the type of the Recurrent Related Party Transactions made: and b) the names of the related parties involved in each type of the Recurrent Related Party Transaction entered into and their relationship with the Company;
175 Establishing Sustainable Growth
th Notice of 57 annual general meeting (cont’d)
AND THAT such approval shall continue to be in force until:-
i) the conclusion of the next AGM of the Company following the General Meeting at which the Proposed Shareholders’ Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;
ii) the expiration of the period within which the next AGM after this date is required to be held pursuant to Section 340 (2) of the Companies Act, 2016 (the Act) (but shall not extend to such extensions as may be allowed pursuant to Section 340 (4) of the Act); or
iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting; whichever is earlier.
AND FURTHER THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or give effect to the Proposed Shareholders’ Mandate.
8. SPECIAL RESOLUTION 1
PROPOSED AMENDMENTS TO THE CONSTITUTION OF THE COMPANY Resolution 10 (Explanatory Note 5) “THAT the proposed amendments to the Constitution of the Company be and are hereby approved and adopted; AND THAT the Board of Directors and Secretaries of the Company be and are hereby authorised to take all steps as are necessary and expedient in order to implement, finalise and give full effect to the proposed amendments to the Constitution of the Company.”
9. To transact any other business of the Company of which due notice shall have been given in accordance with the Companies Act, 2016
By Order of the Board DAMANSARA REALTY BERHAD
WAN RAZMAH BINTI WAN ABD RAHMAN (MAICSA 7021383) Secretary
Kuala Lumpur 30 April 2019
176 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD
th Notice of 57 annual general meeting (cont’d)
EXPLANATORY NOTES
1. AUDITED FINANCIAL STATEMENTS FOR FINANCIAL YEAR
The Audited Financial Statements laid at this meeting pursuant to Section 340 (1) (a) of the Companies Act, 2016 are meantfor discussion only. It does not require shareholders’ approval, and therefore, will not be put for voting.
2. ORDINARY RESOLUTION 6 – TO APPROVE THE REMUNERATION FOR NON-EXECUTIVE DIRECTORS
Directors’ Remuneration (excluding Directors’ Fees) comprises the allowance and other emoluments payable to the Chairman and other Non-Executive Directors is as set out below:
ITEMS CHAIRMAN NEDs
Monthly Fixed Allowance RM5,000 -
Other Benefits Travelling and other claimable benefits Travelling and other claimable benefits
Meeting Allowance (per meeting):
• Board Meeting RM1,000 RM1,000
• Board Audit Committee Meeting - RM1,000
• Board Nomination and - RM1,000 Remuneration Committee Meeting
• Board Risk Management - RM1,000 Committee Meeting
• Tender Board Committee Meeting - RM1,000
• Annual General Meeting RM1,000 RM1,000
• Extraordinary General Meeting RM1,000 RM1,000
3. ORDINARY RESOLUTION 8 – AUTHORITY TO ALLOT SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT, 2016
The proposed Ordinary Resolution 8 is the renewal of the mandate obtained from the members at the last AGM (the previous mandate). The proposed Ordinary Resolution 8, if passed, would provide flexibility to the Directors to undertake fund raising activities, including but not limited to further private placement of shares for the purpose of funding the Company’s future investment project(s), working capital and/or acquisition(s), by the issuance of shares in the Company to such persons at any time as the Directors may deem fit provided that the aggregate number of shares issued pursuant to the mandate does not exceed 10% of the total number of issued shares of the Company for the time being, without having to convene a general meeting. This authority, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next AGM of the Company or at the expiry of the period within which the next AGM is required to be held after the approval was given, whichever is earlier.
4. ORDINARY RESOLUTION 9 – PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR THE EXISTING RECURRENT RELATED PARTY TRANSACTIONS AND PROPOSED NEW SHAREHOLDERS’ MANDATE FOR THE ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (Proposed Shareholders’ Mandate)
The Ordinary Resolution 9 proposed, if passed, is to authorise the Company and/or its subsidiary companies to enter into any recurrent transactions of a revenue or trading nature with Related Parties which are necessary for the day-to-day operations of the Group, subject to the transaction being in the ordinary course of business, on arms’ length basis and are based on normal commercial terms that are not more favorable to the related parties than those generally made available to the public.
Please refer to the Part A of Circular to Shareholders dated 30 April 2019 for further information.
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5. SPECIAL RESOLUTION 1 - PROPOSED AMENDMENTS TO THE CONSTITUTION OF THE COMPANY
The Proposed Amendments to the Constitution of the Company, if passed, shall streamline the Company’s Constitution to be aligned with the enforcement of the Act and to allow for administrative expediency.
Please refer to the Part B of Circular to Shareholders dated 30 April 2019 for further information.
NOTES:
1. In respect of deposited securities, only members whose names appear on the Record of Depositors on 12 June 2019 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.
2. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/(proxies or attorney) or authorised representative to attend and vote in its stead. A proxy may but need not be a member of the Company and need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.
3. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.
4. Where a member of the Company is an Exempt Authorised Nominee (EAN) as defined under the Secruties Industry (Central Depositories) Act 1991 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 EAN may appoint in respect of each omnibus account it holds.
5. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, shall be deposited at the Company’s Share Registrar, Tricor Investor & Issuing House Services Sdn. Bhd., Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than 48 hours before the time for holding the Meeting or adjourned Meeting at which the person or persons named in such instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. The Annual Report and Proxy Form are available for access and download at the Company’s website at www.dbhd.com.my
6. In the case of the corporate member, the instrument appointing a proxy shall be (a) under its Common Seal or (b) under the hand of a duly authorised its officer or attorney and in the case of (b) be supported by a certified true copy of the Power of Attorney.
7. If this Proxy Form is signed under the hands of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a Power of Attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in the Proxy Form.
178 ANNUAL DAMANSARA REPORT2018 REALTY BERHAD STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING
Resolution pursuant to Directors who are retiring in accordance with the Companies Act, 2016 and Company’s Constitution:
(i) Haji Abdullah bin Md Yusof (Section 205) Resolution 1
(ii) Ts. Brian Iskandar bin Zulkarim (Article 68.2) Resolution 2
(iii) Azhari bin Abdul Hamid (Article 68.2) Resolution 3
(iv) Vinie Chong Pui Ling (Article 68.2) Resolution 4
The details of the Directors standing for re-election are on pages 17, 18, 20 and 22.
179 This Page is Intentionally Left Blank PROXY FORM CDS Account No. of Authorised Nominee
I/We (Full Name as per NRIC /Passport No./Certificate of Incorporation in block letters) NRIC No. (new) /Company No. NRIC No. (old) of (Full Address) being a member(s) of DAMANSARA REALTY BERHAD (4030-D) (the Company) hereby appoint
(Full Name as per NRIC /Passport No.) With NRIC No. (new)/Passport No. NRIC No. (old) of (Full Address) of failing him/her (Full Name as per NRIC /Passport No. in block letters) With NRIC No. (new)/Passport No. NRIC No. (old) of (Full Address) or failing him/her the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 57th Annual General Meeting of the Company to be held at Kingfisher 1, Level 3, Fraser Place Puteri Harbour Residensi & Hotel Marina, Persiaran Tanjung, Pengkalan Puteri, 79100 Iskandar Puteri, Johor Darul Takzim on Wednesday, 19 June 2019 at 11.00 a.m. or at any adjournment thereof. With reference to the agenda set forth in the Notice of Meeting, please indicate with an “X” in the space provided below how you wish your votes to be cast on the ordinary resolution specified. If no specific direction as to the voting is given, the Proxy will vote or abstain at his/her discretion.
NO RESOLUTIONS FOR AGAINST ORDINARY RESOLUTIONS 1. To re-elect of Haji Abdullah bin Md Yusof 2. To re-elect of Ts. Brian Iskandar bin Zulkarim 3. To re-elect of Azhari bin Abdul Hamid 4. To re-elect of Vinie Chong Pui Ling 5. To approve the payment of Directors’ Fees to Non-Executive Directors amounting to RM480,000 for the period from 20 June 2019 until the next AGM of the Company in 2020 6. To approve the payment of Directors’ Remuneration (excluding Directors’ Fees) to the Non-Executive Directors up to an amount of RM150,000 for the period from 20 June 2019 until the next AGM of the Company in 2020 7. To re-appoint Messrs. Jamal, Amin & Partners as the Company’s Auditors 8. Authority to Allot Shares Pursuant to Sections 75 and 76 of the Companies Act, 2016 9. Renewal of Shareholders’ Mandate for the existing Recurrent Related Party Transactions and to obtain new Shareholders’ Mandate for the additional Recurrent Related Party Transactions of a Revenue or Trading Nature SPECIAL RESOLUTION 1. To approve the Proposed Amendments to the Constitution of the Company
For appointment of two (2) proxies, percentage of shareholdings to be represented by the respective proxies must be indicated below. NO OF SHARES PERCENTAGE Proxy 1 % Signature of Shareholder(s) or Common Seal Proxy 2 % Date: 100% NOTES: 1. In respect of deposited securities, only members whose names appear on the Record of Depositors on 12 June 2019 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf. 2. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/(proxies or attorney) or authorised representative to attend and vote in its stead. 3. A proxy may but need not be a member of the Company and need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies. 4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particulars securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy. 5. Where a member of the Company is an Exempt Authorised Nominee (EAN) as defined under the Secruties Industry (Central Depositories) Act 1991 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 EAN may appoint in respect of each omnibus account it holds. 6. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies. 7. The instrument appointing a proxy and the Power of Attorney or other authority (if any) under which it is signed, shall be deposited at the Share Registrar of Damansara Realty Berhad, Tricor Investor & Issuing House Services Sdn Bhd, Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, not less than 48 hours before the time for holding the Meeting or adjourned Meeting at which the person or persons named in such instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. The Annual Report and Proxy Form are available for access and download at the Company’s website at www.dbhd.com.my 8. In the case of the corporate member, the instrument appointing a proxy shall be (a) under its Common Seal or (b) under the hand of a duly authorised its officer or attorney and in the case of (b) be supported by a certified true copy of the Power of Attorney. 9. If this Proxy Form is signed under the hands of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the attorney duly appointed under a Power of Attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed in the Proxy Form. Fold this flap to seal
STAMP
THE SHARE REGISTRAR OF DAMANSARA REALTY BERHAD
C/O TRICOR INVESTOR & ISSUING HOUSE SERVICES SDN. BHD. (11324-H) UNIT 32-01, LEVEL 32, TOWER A VERTICAL BUSINESS SUITE AVENUE 3, BANGSAR SOUTH NO. 8 JALAN KERINCHI 59200 KUALA LUMPUR MALAYSIA
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