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ANNUAL 8B5F3G3P/U
I0M%J/H4`(S0V1 REPORT VISION

To become a leading integrated property developer and builder that focus on community living and quality development.

MISSION

Building a sustainable development area that promotes quality & innovative products and excellent services that meets customer’s need and ultimately ensuring equitable shareholder’s returns. Vision & Mission Corporate Calendar 02

About Us Corporate Information 04 Corporate Structure 05

From Board of Directors Chairman’s Statement 07 Management Discussion and Analysis 09 Directors’ Profile 14 Key Senior Management’s Profiles 19

Governance Corporate Governance Overview Statement 21 Audit Committee’s Report 31 Statement on Risk Management and Internal Control 33

Corporate Sustainability Sustainability Statement 39

Financial Reports Directors’ Report 47 Statement By Directors 53 Statutory Declaration 53 Independent Auditors’ Report To The Members of 54 IWCity Statements of Comprehensive Income 60 Statements of Financial Position 61 Statements of Changes in Equity 64 Statements of Cash Flows 68 Notes to the Financial Statements 70

Additional Information List of Properties 145 Analysis of Shareholdings 148 Other Disclosures 151 Notice of 50th AGM 152 Statement Accompanying Notice of 50th AGM 157

Form of Proxy CONTENTS ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CORPORATE CALENDAR

FINANCIAL RESULTS 28 February Announcement of the unaudited quarterly report on consolidated results for the fi nancial period ended 31 December 2018 31 May Announcement of the unaudited quarterly report on consolidated results for the fi nancial period ended 31 March 2018 29 August Announcement of the unaudited quarterly report on consolidated results for the fi nancial period ended 30 June 2018 28 November Announcement of the unaudited quarterly report on consolidated results for the fi nancial period ended 30 September 2018

AGM 30 April Issuance of Annual Report for fi nancial year ended 31 December 2017 and Circular for Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature 7 June 49th Annual General Meeting

BOARDROOM CHANGES 5 June Resignation of En. Izaddeen bin Daud as a Non-Independent Non-Executive Director and En. Abd Razak bin Mohd Yusoff as an Alternate Director 7 June Appointment of Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman as a Non-Independent Non-Executive Director

CORPORATE EXERCISES 12 March Receipt of Off er Document in relation to conditional voluntary take-over by Ekovest Berhad (“Ekovest”) through Mercury Securities Sdn Bhd as Principal Adviser and Astramina Advisory Sdn Bhd as Financial Adviser comprising the following:

i) to acquire all ordinary shares in Iskandar Waterfront City Berhad,(“IWCity”); and ii) any new IWCity shares that may be issued prior to the closing date of the off er arising from the exercise of outstanding employee share options in IWCity, (collectively referred to as the “Off er Share”)

for a consideration of RM1.50 per Off er Share, which shall be satisfi ed by way of :-

(i) a cash consideration of RM1.50 for every 1 Off er Share surrendered; or (ii) a share exchange based on an exchange ratio of 1 new ordinary share in Ekovest to be issued at an issue price of RM1.50 each for every 1 Off er Share surrendered.

22 March Issuance of Independent Advice Circular to the Holders of the off er shares in relation to the Conditional Voluntary Take-Over Off er by Ekovest Berhad to acquire all ordinary shares in IWCity and any new IWCity shares that may be issued prior to the closing date of the off er arising from the arising from the exercise of outstanding employee share options in IWCity (both collectively referred to as the “Off er Shares”)

for a consideration of RM1.50 per Off er Share which shall be satisfi ed by way of :-

(i) a cash consideration RM1.50 for every 1 Off er Share surrendered; or (ii) a share exchange based on an exchange ratio of 1 new ordinary share in Ekovest to be issued at an issue price of RM1.50 each for every 1 Off er Share surrendered.

29 March Receipt of Press Notice from Mercury Securities Sdn Bhd on behalf of Ekovest Berhad, informing that the shareholders of Ekovest Berhad have not approved the resolution to the Conditional Voluntary Take-Over Off er at its Extraordinary General Meeting

2 About Us ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CORPORATE INFORMATION

Dato’ Hj. Ayub bin Mion Lim Foo Seng Independent Non-Executive Chairman Independent Non-Executive Director

Tan Sri Dato’ Lim Kang Hoo Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman Executive Vice Chairman Non-Independent Non-Executive Director (Appointed w.e.f 7 June 2018) Wong Khai Shiuan 5" 21&3"&/" 1,/ҟ%&"#5" 21&3"Ȅ& "/ Lim Chen Herng Alternate Director to Tan Sri Dato’ Lim Kang Hoo Datuk Lim Keng Guan Executive Director Izaddeen bin Daud Non-Independent Non-Executive Director Khoo Boon Ho (Resigned w.e.f 5 June 2018) Senior Independent Non-Executive Director  !7( &+,%!20,Ȅ Bernard Hilary Lawrence Alternate Director to Izaddeen bin Daud Independent Non-Executive Director (Resigned w.e.f 5 June 2018)

Mohd Salleh bin Othman Independent Non-Executive Director Board Of Directors SHARE REGISTRAR Messrs. Tricor Investor Services Sdn. Bhd. Unit 32-01, Level 32, Tower A Vertical Business Suite RISK MANAGEMENT Avenue 3, Bangsar South COMMITTEE No. 8 Jalan Kerinchi, 59200 Kuala Lumpur. Lim Foo Seng Tel: 03-2783 9299 Chairman Fax: 03-2783 9222 E-mail : [email protected] Bernard Hilary Lawrence REGISTERED Khoo Boon Ho AUDIT COMMITTEE OFFICE Khoo Boon Ho Suite 1301, 13th Floor Chairman City Plaza, Jalan Tebrau 80300 Johor Bahru Dato’ Hj. Ayub bin Mion Johor Darul Ta’zim STOCK EXCHANGE Lim Foo Seng Tel No : 07-3322088 LISTING TENDER AWARD Fax No : 07-3328096 COMMITTEE Main Market, Bursa Malaysia Tan Sri Dato’ Lim Kang Hoo Securities Berhad Wong Khai Shiuan Stock Code: 1589 Khoo Boon Ho PRINCIPAL PLACE Stock Name: IWCITY NOMINATION Sector: Properties COMMITTEE OF BUSINESS Bernard Hilary Lawrence G08, Block 8, Danga Bay Chairman Jalan Skudai, 80200 Johor Bahru Johor Darul Ta’zim Dato’ Hj. Ayub bin Mion Tel No : 07-2333888 Fax No : 07-2333777 Khoo Boon Ho EMPLOYEES’ SHARE OPTION COMMITTEE WEBSITE Bernard Hilary Lawrence www.iwcity.com.my Chairman AUDITOR REMUNERATION Khoo Boon Ho COMMITTEE Lim Foo Seng Messrs. Ernst & Young B-15, Medini 9, Lim Foo Seng Persiaran Medini Sentral 1, Chairman Bandar Medini Iskandar, 79250 Iskandar Puteri, Dato’ Hj. Ayub bin Mion Johor Darul Ta’zim. Bernard Hilary Lawrence COMPANY Tel No: 07-288 3111 SECRETARIES Fax No: 07-288 3112 Yong May Li (LS 0000295) Wong Chee Yin (MAICSA 7023530) Lim Aik Yong (MAICSA 7054965)

4 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

CORPORATE STRUCTURE

SUBSIDIARIES ASSOCIATES

Tebrau Bay Sdn Bhd Tropicana Danga Senibong Sdn Bhd 100% (414710-X) 30% (1030663-X) (Property Development) (Property Development)

Aset Nusantara Development Sdn Bhd 49% (427374-T) (In liquidation)

Southern Crest Development Sdn Bhd Greenland Tebrau Sdn Bhd 100% (613683-D) 20% (1132314-P) (Investment Holding) (Property Development)

Tebrau Bay Constructions Sdn Bhd 100% (42888-D) (Construction)

Success Straits Sdn Bhd 100% (1158947-H) (Property Development)

Trillion Greencity Sdn Bhd 100% (1158676-W) (Dormant)

Bayou Bay Development Sdn Bhd 100% (391682-P) (Property Development)

Bayou Management Sdn Bhd 100% (646470-K) (Property Holding and Development)

5 From The Board And The Management Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

CHAIRMAN’S STATEMENT

On behalf of the Board and the Company, it is my pleasure to present to you IWCity Annual Report 2018.

Dear Valued Shareholders,

Foreword

Malaysia’s economy sustained an average growth of 4.8% in Year 2018; a more moderate pace as compared to 5.9% in year 2017. The Mid-term Review of the 11th Malaysia Plan has forecasted Malaysia’s gross domestic product (“GDP”) to grow between 4.5% and 5.5% for the 2018 – 2020 period. The steady economic growth and the repealing of the Goods and Service Tax should bring about a more moderate pace of infl ation and encourage spending in the country.

It was reported that the demand for landed residential property in the southern Johor, especially in the Iskandar Malaysia region, is encouraging despite the slowdown in the property market. The property outlook in Iskandar Malaysia remains attractive, adding that developers should come out with the right products to attract potential buyers.

2018 has been a challenging year for the Group as the country experiences economic uncertainties mainly due to the change in the local political landscape. IWCity continues to grow and sustain as one of the major property developers in the Iskandar Malaysia region despite the soft Property Market and the uncertain global economic landscape.

However, as Iskandar Malaysia has been the home of our landbank since inception, we remain optimistic that Iskandar Malaysia will maintain its position as the country’s foremost economic region and continue its impressive rate of growth. Based on announcement made by the Iskandar Regional Development Authority (IRDA) that Iskandar Malaysia has recorded investments of RM32.2 billion throughout 2018 surpassed the annual RM30 billion targets, the committed investments have accumulated to RM285.34 billion in between year 2016 and year 2018. From the fi gure of committed investments, local investors contributed RM177 billion, or 62%, while the remaining RM108 billion is from foreign investors.

Company Performance

In spite of the various challenges we faced during of RM45.7 million. The Loss After Taxation of RM6.6 the year mainly due to the slowdown of the global million was attributable to the decrease in gross profi t economy, I am presenting herewith, the results for the margins achieved by the Group during FYE 2018 Group for the fi nancial year ended 31 December 2018 of 4.71% as compared to 63.85% for the FYE 2017 (“FYE 2018”). The Group registered a decrease in both mainly attributed to the sale of land to Greenland revenue and profi ts during the FYE 2018. The Group Tebrau Sdn Bhd (“Greenland”). achieved Revenue of RM122.1 million for the FYE 2018, representing a decrease of RM145.6 million or 54.39% We are hopeful that 2019 will see a turnaround in the as against FYE 2017 of RM267.6 million. The Group property market and the Group will be able to grow also recorded a Loss After Taxation of RM6.6.million as with a better development progress and expansion of compared to the previous year’s Profi t After Taxation development plan.

7 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CHAIRMAN’S STATEMENT Cont’d

Property Development Given the above, with one of the most attractive tracts of waterfront properties situation in the region of During the year, the Group continued to focus in our Iskandar Malaysia, IWCity’s prospects remain bright. property development division where we have two We will continue to grow our property development major Projects namely “Botanika” and “Danga Sutera” division through our current developments and also For Botanika Project, its total 264 condominium units identify strategic partners to accelerate our growth of fi rst Tower has been duly completed in March 2019 whilst conserving capital. We will continue to monitor and is in the midst of handling over to the purchasers. the property market conditions in view of the national The construction works for the second Tower of the and global uncertainties and plan to capitalise on the same Project is expected to be completed by end of continuing strong demand in the landed residential 2019. In addition, the next phase of Botanika Project property segment. comprising of the third tower and 40 units of luxury town villas are expected to be launched in the near Corporate Governance future. The Board strongly believes that corporate governance Another important progress of our Group development plays a key role in ensuring sustainability and stability would be the ongoing works for the Danga Sutera for the Group’s continued success. I am pleased to Project. Danga Sutera is a gated mix development note that the Group practises a high level of corporate comprising of 625 landed residential units with governance where the Board continues to maintain clubhouse facilities and a commercial plot for future a majority of Independent Directors to ensure good development, which has achieved completion stage governance is practiced whilst providing check-and- of approximately 35% to-date. The launch of 525 balance on all decisions made by the Board. The units of super linked landed component has fetched a Board has worked with the Management to ensure remarkable response and we are expecting to launch the highest compliance to the recommendations of the remaining 100 units of Semi-D and bungalows in the Malaysian Code on Corporate Governance 2017 year 2019 which is envisaged to further strengthen the (“MCCG 2017”) in year 2018, and will continue to Group’s foothold in landed properties’ market. ensure the demonstration of good practice in comply with the MCCG 2017 within IWCity Group. Major Events Acknowledgements On 18 December 2017, the Company received a notice of conditional voluntary take-over off er from Ekovest We bid farewell to En. Izaddeen bin Daud who had Berhad (“EB”) to acquire all the ordinary shares in tendered his resignation from the Board due to his IWCity, subject to the approval of EB’s shareholders. other business commitments. On behalf of the Board However, the off er was subsequently rescinded as and the Management, we would like to extend our EB did not receive the required approval from its appreciation for his contributions during his tenure shareholders on 29 March 2018. with the Board. I would like to take this opportunity to welcome Dato’ Hj. Mohd Noorazam bin Dato’ Hj. On 30 March 2018, Bayou Bay Development Sdn Bhd, Osman who joined the Board on 7 June 2018. On a a subsidiary of IWCity held a Majlis Penyerahan Kunci separate note, we would like to congratulate him on Penempatan Semula Desa Jaya, to offi ciate the keys the conferring of his Datoship, received on 23 March hand over for the Project Pangsapuri Desa Jaya. This 2019. Project is a collaboration between State Secretary Incorporated Johor and Bayou Bay Development Sdn On behalf of the Board, I wish to express our sincere Bhd under the purview of Unit Perancangan Ekonomi gratitude and appreciation to the government Negeri Johor (“UPEN”) with a total of 320 apartment authorities, our bankers, business associates, clients units built on 8.4 acres of land, catered mainly for and more importantly our esteemed shareholders for the residents involved in the relocation of Kampung their continued support. Bakar Batu and Kampung Desa Jaya to make way for development in Permas Jaya. I would like to express my sincere appreciation to my fellow Board members for their support and Prospects contributions, senior management team who has been working tirelessly and employees for their Iskandar Malaysia is expecting an additional 16,000 perseverance and contributions throughout the year. and 14,000 residential units by end of 2019 and 2020 respectively, with about 80% to be contributed by The Board and the Management as a whole, will condominium and serviced residence. The incoming endeavour with our full eff ort to deliver a better Year supply is mainly located at Johor Bahru City Centre, 2019. Let’s look forward to better year ahead for the Iskandar Puteri and Tebrau area. Iskandar Malaysia Group. will continue to drive demand for properties in south Johor. DATO’ HJ AYUB BIN MION Chairman Dated: 10 April 2019 8 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

MANAGEMENT DISCUSSION AND ANALYSIS

Introduction

IWCity is an investment holding company and through its subsidiaries, mainly involved in property development, property land-banking and construction. As one of the largest owners of waterfront land in Eastern Johor Bahru, our vision is to become a leading integrated property player focusing on community living and quality development.

Overview of Group’s Business and Operations

During the year, the Group continued to focus on its Botanika Project and Danga Sutera Project. In the fi rst quarter of the year, Danga Sutera Project was launched. These two developments form the core of the Group’s property development.

Botanika, comprising 3 tower blocks, totalling 792 condominium units and 40 waterfront villas are constructed on a 12 acres site fronting the Tebrau River in Bakar Batu, approximately 10km east of the city centre. We are pleased to announce that the fi rst tower block of 264 condominium units was completed in the fi rst half of 2019 and is in the midst of handing over to purchasers. The works on second tower block has commenced and is expected to be completed by end of 2019. The third tower block and the 40 units of villas will be launched in the near future.

In view of the oversupply of high-rise properties in Johor Bahru, the Board has in year 2017 approved the Group’s diversifi cation into the landed property sector. In the same year, a 67.5 acres freehold land has been acquired. This property is strategically located in the Skudai Corridor which is within a matured residential and commercial township with convenient neighborhood amenities, named Danga Sutera. Danga Sutera Project is a gated mix development project comprising of 625 landed residential units with clubhouse facilities and a commercial plot for future development. Of the 625 units, 525 units of super-linked landed component were launched during the year with very encouraging responses. Phase 2 comprising of the remaining 100 units of Semi-D and bungalows is targeted for launch in year 2019.

The highlights of the IWCity Group’s fi nancial information for the past 5 fi nancial years are as follows:

<------Financial year ended 31 December------> 2018 2017 2016 2015 2014 (Restated) (Restated) RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 122,058 267,632 76,596 181,636 157,951 Earnings before interest, taxes, 2,215 69,287 (3,255) 23,034 6,696 depreciation and amortization (“EBITDA”) Finance costs 13,823 4,434 12,108 1,961 241 (Loss)/Profi t before taxation (12,201) 64,178 (14,918) 20,554 6,183 (Loss)/Profi t after taxation (6,604) 45,674 (16,026) 6,835 3,362

Net assets (“NA”) 810,846 817,450 600,845 552,981 542,784 Total assets 1,863,313 1,785,109 1,357,771 1,322,107 863,574 Borrowings 241,081 238,843 142,387 199,104 206,773 Liabilities/Equity (times) 1.30 1.18 1.26 1.39 0.90

(Loss)/Earnings per share (sen) (0.79) 5.58 (2.28) 1.02 0.50 NA per share (sen) 97 98 82 83 82 Dividend per share (RM) ----- 9 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

MANAGEMENT DISCUSSION AND ANALYSIS Cont’d

Overview of Group’s Business and Operations Cont’d

Highlights of IWCity’s share prices traded on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the past 5 fi nancial years are as follows:

<------Financial year ended 31 December------> 2018 2017 2016 2015 2014 RM RM RM RM RM

Year high 1.45 3.29 1.14 1.60 1.78 Year low 0.37 0.80 0.75 0.75 1.07 Year close 0.42 1.37 0.90 1.01 1.27 Market capitalisation (as at the 351,703 1,147,223 663,030 676,424 850,553 fi nancial year end) (RM’000)

Review of Financial Results and Financial Condition

Notwithstanding our Group’s best eff ort, the fi nancial year under review was one of consolidation for the Group as the property market remained subdued. No new construction projects were undertaken by the Group except for the relocation of squatters at Senibong. Against this challenging environment, the Group had experienced a decline in both revenue and profi ts during the Financial Year Ended 2018 (“FYE 2018”). The Group recorded revenue of RM122.1 million for the FYE 2018, representing a decrease of RM145.6 million or 54.39% from the Financial Year Ended 2017 (“FYE 2017”) of RM267.6 million. The decrease in revenue was mainly due to the recognition of sale of land to Greenland valued at RM206 million in FYE 2017. Further to that, as most of our construction projects are toward the end, revenue recognised for the construction segment has also decreased from RM17.7 million in FYE 2017 or 13.29% to RM15.3 million in FYE 2018.

In line with the lower revenue, the Group recorded a loss before tax of RM12.2 million compared with a profi t before tax of RM64.2 million in FYE 2017. The loss before tax of RM12.2 million was attributable to the decrease in gross profi t margins achieved by the IWCity Group during the FYE 2018 of 4.71% as compared to 63.85% for the FYE 2017. The higher gross profi t margin in 2017 was in turn due to the land sale to Greenland. Another factor leading to the losses was the increase in fi nance costs incurred. Finance costs has also increased from RM4.4 million in FYE 2017 to RM13.8 million in FYE 2018, representing an increment of RM9.4 million or 211.75%. The increase is attributable to higher fi nancing required for working capital and interest charged on the additional borrowings.

Administrative expenses decreased signifi cantly by RM98.1 million from RM103.3 million in FYE 2017 to RM5.2 million or 94.97% in FYE 2018. An one-off expenditure of RM72.1 million was recorded in FYE 2017 resulting from the employees share options granted to our directors and employees and a tax penalty of RM21.1 million. Whereas, selling and marketing expenses had increased from RM634,000 in FYE 2017 to RM1.4 million in FYE 2018 or 110.7% due to the higher percentage of work done in development sector.

As at 31 December 2018, the Group had total assets of RM1.87 billion and total liabilities of RM1.05 billion. This is compared to total assets of RM1.79 billion and total liabilities of RM0.97 billion as at 31 December 2017. The marginal increase in total assets of the IWCity Group was related to the increase in property development capitalised and other current assets in the FYE 2018 as compared to the FYE 2017. The Group’s cash and bank balances decreased by RM6.5 million from RM48.2 million for the FYE 2017 to RM41.6 million for the FYE 2018 due to the repayment of bank borrowings.

10 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

MANAGEMENT DISCUSSION AND ANALYSIS Cont’d

Review of Financial Results and Financial Condition Cont’d

The trade and other payables of the IWCity Group increased by RM109.2 million or 19.29%, mainly due to the increase in payables as a result of payments to contractors and the capitalisation of the interest charged.

The IWCity Group’s total borrowings increased by RM2.2 million or 0.94% from RM238.8 million for the FYE 2017 to RM241.1 million for the FYE 2018. This increase is primarily due to the drawdown of bridging loan for the purpose of Danga Sutera development.

Review of operating activities

The IWCity Group recognsied a loss before taxation of RM12.2 million for the fi nancial year due to the slow down in business activities.

The property development division realised sales of RM106.8 million was attributed to sales from the Botanika project and Danga Sutera project. The Botanika project continues to progress well with fi rst Tower duly completed and currently in the midst of handing over. In addition, the structure and podium for second Tower has also been completed. The Danga Sutera project sees healthy progress with the foundation having been completed. Other progress such structural, walls and roofi ng of the Project are all work in progress. A total of 525 units super-linked landed components of Danga Sutera is expected to handover in the fi rst half of 2020.

Our construction segment recorded revenues of RM15.3 million from the rescued project of Taman Bayou Tebrau, squatter resettlement and Pengerang projects. These projects are nearing completion except for the relocation of squatters at Senibong which the agreement was inked with the Johor State Government in FYE 2017.

Anticipated or known risks

(i) Business risk

Property development is subject to certain business risks inherent to the industry including but not limited to, changes in general economic conditions, government regulations, infl ation, competition from existing players and new entrants, shortage of labour for project completion, disruption in supply of building materials, non- renewal of licences and risks relating to the fi nancing of projects.

Notwithstanding the above, the Group continues to limit and mitigate these risks through the implementation of prudent business strategies, continuous review of the operations and marketing strategies, eff orts taken to improve effi ciency, as well as close monitoring of the development projects undertaken. There can be no assurance that any of these risks will not have a material adverse impact on the Group.

(ii) Reclamation risks

As a signifi cant portion of the Group’s landbank comprise of waterfront properties, land reclamation has been a necessary and recurring activity for the Group. In addition, the 228 acres located in Plentong that has been alienated by the Government to IWCity is completely submerged and will require extensive reclamation. During the course of land reclamation, the Group may be exposed to operational risks, which include amongst others, unstable soil conditions post-reclamation, which may result in possible erosion or cave-in of land. In the event of such incidents occurring, the Group may incur substantial fi nancial losses as well as possible damage in reputation.

Notwithstanding the above, the Board is confi dent the Group has the necessary experience to oversee the successful completion of the required reclamation works. Furthermore, the Board shall take all measures to secure the necessary approvals and the Group has and will continue to engage reputable construction and reclamation companies with the necessary experience and capabilities to undertake the required works.

11 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

MANAGEMENT DISCUSSION AND ANALYSIS Cont’d

Anticipated or known risks Cont’d

(iii) Delays in commencement and completion

The timely completion of property development projects are dependent on many external factors, including obtaining the necessary approvals from the relevant authorities including land offi ces, planning authorities and local councils as scheduled, securing construction materials in adequate amounts and the satisfactory performance by appointed contractors.

Ability to execute projects in a timely and cost eff ective manner as the projects undertaken may be aff ected by external factors, which may be beyond the Group’s control. Delays in construction of property development projects undertaken by the Group’s third party sub-contractors will have an adverse eff ect on the completion of our property development projects.

To mitigate this, the Group endeavours to closely monitor its sub-contractors as well as the progress of the development projects in its eff orts to achieve the development projects’ timely completion.

(iv) Cost of materials and development projects

The materials used in the development projects of the Group generally represent a signifi cant portion of development cost. These materials are global commodities, for which their availability and prices depend on local and global market conditions. The volatility in fuel prices, the revision of electricity tariff s and the control measures on commodity prices and additional taxes implemented by the Government have added further uncertainty to the costs to be incurred by property developers. As building materials are key inputs for construction of building, structures and infrastructures, fl uctuations in its prices will aff ect the Group’s cost and profi tability, especially in projects where the selling prices of the Group’s development properties have been fi xed.

In a situation where the Group has already launched a project and the cost of raw materials increases above its budgeted costs, the Group would be faced with reduced profi t margins. Any material adverse fl uctuation in transportation and material costs will also aff ect the Group’s profi t margins should it not be able to pass on any increased costs to the purchasers of the Group’s development properties and all measures are taken to minimise this risk.

(v) Financing and interest rate risks

The Group’s working capital requirements for development and construction activities may be partially funded via interest-bearing bank borrowings. As such, future fl uctuations in interest rates could have material eff ects on the Group’s interest and principal payments. There can be no assurances that the Group’s performance will not be aff ected in the event of adverse changes in interest rates.

Notwithstanding the above, the funds available to the Group are expected to be suffi cient for the Group to meet its fi nancial obligations.

Forward Looking Statement

The property market in Johor particularly in the Iskandar region over the next few months expects to be encouraging, despite the uncertainty in domestic growth, global demand and prospects in Malaysia. Nevertheless, the Group believes that its products, with an innovative concept, pricing and location will sustain favorable patronage from the homebuyers’ market. The Group will continue to supply a wide range of premium quality products, ranging from deluxe residences with high-end fi nishes and facilities to sizable landed units with practical and effi cient layouts within the township of its development. The Group continues to derive its revenue mainly from the current Botanika Project and Danga Sutera Project.

12 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

MANAGEMENT DISCUSSION AND ANALYSIS Cont’d

Forward Looking Statement Cont’d

The Group will strive to enhance its operational effi ciencies, manage costs and cash fl ows with the aim of achieving improved results and ensure sustainable long-term growth for the Group.

With a stable and capable management team, the Group shall be able to weather through the trials and tribulations and barring any unforeseen circumstances; the performance for next year is expected to be satisfactory.

Dividend policy

In view of the unstable macro market and the performance of the Group, the Board does not consider it to be prudent to recommend the declaration of any dividend for the fi nancial year ended 31 December 2018.

13 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

DIRECTORS’ PROFILES

DATO’ HJ. AYUB BIN MION TAN SRI DATO’ LIM KANG HOO MR. WONG KHAI SHIUAN (Independent Non-Executive, (Executive Vice Chairman) (Executive Director cum Chief Chairman) Malaysian, male, age 64 Executive Offi cer) Malaysian, male, age 72 Malaysian, male, age 37

Dato’ Hj. Ayub was appointed Tan Sri Dato’ Lim was appointed to Mr. Wong Khai Shiuan has been to the Board on 3 March the Board on 3 July 2012. He was on the Board since 18 February 2004 as Non-Independent, then appointed as Executive Vice 2014. He was appointed as Chief Non-Executive Director and was Chairman on 14 August 2012. Executive Offi cer on 17 June then re-designated as Independent 2015. Non-Executive Director on 28 Tan Sri Dato’ Lim is a businessman January 2014. He graduated with with over 40 years of experience He graduated in 2003 with a a Bachelor of Arts (Hons.), from in the construction industry and Bachelor of Arts in Business University Malaya in 1970. He machinery related industry. Information Systems & joined the Johor State Civil Service He started his involvement in Accounting from the University of on 14 June 1970 and served the the construction industry soon Middlesex, UK. Land Administration for 17 years. after completing his secondary His last post was Deputy Director education, assisting the family He has been with the Iskandar of Land and Mines, Johor, 1982- construction business. His Waterfront Holdings (“IWH”) 1986. dynamism and vision coupled with Group since year 2003 serving experience saw the companies in various capacities and during He retired as the State Secretary of that he leads grow by leaps and his tenure has amassed Johor. Upon his retirement in 2003, bound. considerable experience in he was appointed as Development management and property Advisor to the State Government. At present, he is the Executive development & investment. Prior At the same time he was appointed Chairman of Ekovest Berhad and to joining the IWH Group, he as the Chairman of Cahaya Jauhar PLS Plantations Berhad, all of worked with Knusford Berhad in Sdn Bhd, a joint venture company which are listed on the Main Market the marketing department. He is between the State Government of Bursa Malaysia Securities a director of Iskandar Waterfront and UEM Land Sdn Bhd. The Berhad and also a Director of Sdn Bhd and several other private company was responsible for several other private limited companies. planning and developing ‘Kota companies. His vast experience Iskandar’, the New Administrative in the construction industry had He is a nephew of Tan Sri Dato’ Centre of Johor in Iskandar Puteri. been instrumental to the growth Lim Kang Hoo and cousin of and development of the Iskandar Datuk Lim Keng Guan and Mr. Dato’ Hj. Ayub was appointed to Waterfront Group. Lim Chen Herng. QSR Brands Berhad/KFC Holdings (Malaysia) Berhad’s Board from Tan Sri Dato’ Lim is the father of 2011 till 2013. He also holds Mr. Lim Chen Herng. He is also directorship in several private the uncle of Datuk Lim Keng Guan limited companies. and Mr. Wong Khai Shiuan.

Dato’ Hj. Ayub does not have any family relationships with any Director and/or major shareholder of the Company.

14 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

DIRECTORS’ PROFILES Cont’d

DATUK LIM KENG GUAN MR. KHOO BOON HO MR. BERNARD HILARY (Executive Director) (Senior Independent LAWRENCE Malaysian, male, age 55 Non-Executive Director) (Independent Non-Executive Malaysian, male, age 79 Director) Malaysian, male, age 52

Datuk Lim was appointed to the Mr. Khoo was appointed to the Mr. Bernard was appointed to the Board on 5 July 2013. Board on 15 July 2003. Board on 1 September 2009.

Datuk Lim holds a Diploma in Mr. Khoo, an accountancy graduate Since graduating in 1990, Quantity Surveying and has from Australia was admitted as a Mr. Bernard has garnered acquired more than 30 years of member of the Australian Society considerable experience having in-depth commercial experience in of Accountants in 1962. He is also served as Head of Legal property development, construction a Fellow of the Institute of Certifi ed Department for a local bank, as and related activities. This includes Public Accountants of Singapore. Legal Adviser to a subsidiary of building and civil engineering works, Upon graduation, he joined a Telekom Malaysia Berhad and design and build, turnkey projects, Singapore Public Accountant as Group Legal Adviser to the trading in building materials, fi rm, as an auditor before joining Articulate Group of Companies. reconditioning and rental of Boustead Holdings Berhad in Since 2001, he has been the machinery. 1963. He was the Group Financial Managing Partner of Messrs B H Controller when he resigned in Lawrence, Advocates & Solicitors, He was previously Project Director 1975 to join Boustead Singapore a boutique law fi rm operating in the of PLS Plantation Berhad, which is Limited, a public limited company. areas of corporate, conveyancing, listed on the Main Market of Bursa He was the Deputy Managing construction and litigation. With Malaysia Securities Berhad. In the Director when he left Boustead his varied experience, Mr. Bernard year 2000, he joined the Iskandar Singapore. He is also a member has knowledge of the corporate Waterfront Holdings (“IWH”) Group of The Institute of Internal Auditors as well as legal sectors. of Companies and was appointed Malaysia. Group Head of Procurement and Mr. Bernard holds a Bachelors Contract Administration where he He also holds directorship in Degree in Law (with Honours) was instrumental in the extensive several private limited companies. from the University of Warwick, upgrading and reclamation works Coventry, England, a Masters carried out by the IWH Group of Mr. Khoo does not have any family Degree in Law from University Companies. Datuk Lim is presently relationships with any Director of Malaya, is a Barrister of Executive Chairman of Lim Seong and/or substantial shareholder of Grays Inn, London and is a Hai Holdings Sdn Bhd and holds the Company. KLRCA empaneled CIPAA directorships in other private limited Adjudicator. Currently, he also is companies including Iskandar an Independent Non-Executive Waterfront Holdings Sdn Bhd. Director in Knusford Berhad.

Datuk Lim is the nephew of Tan Sri He does not have any family Dato’ Lim Kang Hoo and cousin to relationships with any Director Mr. Wong Khai Shiuan. and/or substantial shareholder of the Company.

15 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

DIRECTORS’ PROFILES Cont’d

EN. MOHD SALLEH BIN OTHMAN DATO’ HJ. MOHD NOORAZAM BIN DATO’ HJ. (Independent Non-Executive Director) OSMAN Malaysian, male, age 67 (Non-Independent Non-Executive Director) Malaysian, male, age 51

En. Mohd Salleh was appointed to the Board on 18 Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman was March 2013. appointed to the Board of Iskandar Waterfront City Berhad on 7 June 2018. He graduated with a B.Sc. (Hons) Degree in Housing, Building and Planning from Universiti Sains He graduated with a Bachelor of Arts (Hons) Malaysia. After graduation, he joined Petroliam Government and Public Policy from Northumbria Nasional Berhad (“Petronas”) where he served in University, New Castle Upon Tyne, United Kingdom various departments and divisions for a span of in 1990. approximately 15 years. He joined the Johor Civil Service in May 1991 and was Some of the senior position he has held includes posted to Johor Bahru District Land Offi ce as Assistant Management Executive of its Property Department District and Land Administrator eff ective June 1991. In from 1978 to 1981, Head of Building Section of its 1995, he became the Private Secretary to the former Special Projects Department from 1982 to 1984, Chief Minister of Johor, Tan Sri Dato’ Haji Abdul Ghani Deputy Manager of its Property Development bin Othman. Thereafter, he was assigned to be the Department from 1985 to 1987, Manager of its Assistant Director of Johor State Economic Planning Property Development Department from 1988 to Unit (“UPENJ”). In 2003, he became Senior Assistant 1989 and fi nally being promoted to Senior Manager Director (Macro and Privatization) UPENJ until 2006, of the same department in 1990. when he was promoted to the post of Deputy Director 1 in UPENJ. During the same period, he was also During his employment in Petronas, he acquired skills holding the post of Director (GM) of Syarikat Air and invaluable experience in property development, Johor Holdings Sdn Bhd. In 2013, he became the property management, property maintenance and District Offi cer of Kota Tinggi and subsequently the also project management. He left Petronas in 1993 District Offi cer of Muar in January 2017. In November to join Kuala Lumpur City Centre Bhd as the Deputy 2017, he was appointed as Chief Executive Offi ce of General Manager of its Real Estate Division. He Sports Johor Sdn. Bhd., a wholly owned subsidiary was later promoted to Project Director of the Project of Kumpulan Prasarana Rakyat Johor Sdn Bhd. Management Division in 1995. He resigned from (“KPRJ”), primarily responsible for development of Kuala Lumpur City Centre in 1995 and thereafter, sports in Johor and main organizer for SUKMA Johor he joined Ekovest Berhad and resigned from 2020. Ekovest Berhad, a year later. Currently, he also is an Independent Non-Executive Director in Knusford With eff ect from 5 June 2018, he holds the position Berhad. Chief Executive Offi cer of KPRJ, the fi rst Johor Government Servant to hold such a post. He does not have any family relationship with any Director and/or substantial shareholder of the He does not have any family relationship with company. any Director and/or substantial shareholder of the Company.

16 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

DIRECTORS’ PROFILES Cont’d

MR. LIM FOO SENG (Independent Non-Executive Director) Malaysian, male, age 49

Mr. Lim Foo Seng was appointed to the Board of Directors of Iskandar Waterfront City Berhad on 11 October 2013.

He obtained his professional accounting certifi cation from Malaysian Institute of Certifi ed Public Accountants in 1997. He is a member of the Malaysian Institute of Certifi ed Public Accountants and the Malaysian Institute of Accountants. He started his career in Deloitte Kassim Chan, an international accounting fi rm, from 1989 till 1995 where he acquired knowledge, experience and exposure in management consultancy, taxation & accounting and auditing standards.

He left to join Arab-Malaysian Corporation Berhad Group (“Amcorp Group”) in 1995 and was involved in the business planning, venture capital activities, corporate audit, corporate restructuring and monitoring of portfolio companies in his capacity as an Associate Director. He also served as a board member of various portfolio companies of Amcorp Group. He left Amcorp Group in 2003 where his last position with Amcorp Group was a Chief Financial Officer of MCM Technologies Berhad, an IT incubator and a subsidiary of Amcorp that was previously listed on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) in which he played an instrumental role in its initial public off ering.

Thereafter, he held various senior management positions and served as a board member of various established private limited and public listed companies in Malaysia. He joined Quest Technology Sdn Bhd in 2003 as a Chief Financial Offi cer and served as an Executive Director for Envair Holding Berhad, the holding company of Quest Technology Sdn Bhd, from 2005 to 2008. Envair Holding Berhad was involved in cleanroom engineering services and listed on ACE Market of Bursa Securities. From 2008 to 2009, he was an Executive Director of Asia Bioenergy Technologies Berhad (“Asia Bioenergy”), a technology incubator listed on ACE Market of Bursa Securities. Thereafter in late 2009, he set up and co-owned an investment holding company, LFS Holdings Sdn Bhd, which holds minority stakes in unquoted shares in few companies in producing parts of electrical and electronic products, in which he subsequently disposed of his stakes and resigned as director in 2011. Subsequently, he embarked into retail industry where he was the Head of Strategic Planning for Aivoria Group Sdn Bhd (“Aivoria”) and Winn Worldwide Sdn Bhd (“Winn”) from 2011 to 2013 and 2014 to 2017 respectively. Aivoria and Winn are mainly involved in the retail chain business of cosmetic and fashion segment respectively.

Currently, he is the Chief Strategy Offi cer of Nova Pharma Solutions Bhd, a company involved in the provision of engineering services for pharmaceutical and biotechnology industries and listed on the LEAP Market of Bursa Malaysia.

He was appointed as Independent Non-Executive Director of Knusford Berhad on 4 December 2013. From 2012 – 2015, he was the independent director of Asia Bioenergy.

He does not have any family relationship with any Director and/or substantial shareholder of the Company.

17 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

DIRECTORS’ PROFILES Cont’d

MR. LIM CHEN HERNG (Alternate Director to Tan Sri Dato’ Lim Kang Hoo) Malaysian, male, age 32

Mr. Lim Chen Herng was appointed to the Board on 8 July 2015.

He graduated with a Degree in Business Management from Royal Holloway, University of London in 2008. He has been with the family business since 2008, with management exposure in the property development, construction, fi nance and oil & gas industry.

He also sits in the Board of several private limited companies, most notably the master developer Iskandar Waterfront Holdings Sdn Bhd, one of the substantial shareholders of Iskandar Waterfront City Berhad. At present, he is the Group Executive Director of Iskandar Waterfront Holdings Sdn Bhd where he oversees the business development and investment from the Group. Besides, he is also sitting on the Board of Knusford Berhad and acting as an alternate director in Ekovest Berhad.

He is a son of Tan Sri Dato’ Lim Kang Hoo and cousin of Datuk Lim Keng Guan and Mr. Wong Khai Shiuan.

CONFLICT OF INTEREST

There is no confl ict of interest between the Directors and the Group except for the recurrent related party transactions where the Directors have interest, as disclosed in the Note 33 of the Audited Financial Statements.

CONVICTION FOR OFFENCES

None of the Directors have been convicted for any off ences (except traffi c off ences) within the past 5 years or any public sanction or penalty imposed by relevant regulatory bodies during the fi nancial year.

18 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

KEY SENIOR MANAGEMENT’S PROFILES

TAN SRI DATO’ LIM KANG HOO MR. WONG KHAI SHIUAN DATUK LIM KENG GUAN (Executive Vice Chairman) (Executive Director cum Chief (Executive Director) Malaysian, male, age 64 Executive Offi cer) Malaysian, male, age 55 Malaysian, male, age 37

Tan Sri Dato’ Lim was appointed to Mr. Wong Khai Shiuan has been Datuk Lim was appointed to the the Board on 3 July 2012. He was on the Board since 18 February Board on 5 July 2013. then appointed as Executive Vice 2014. He was appointed as Chief Chairman on 14 August 2012. Executive Offi cer on 17 June 2015. Datuk Lim holds a Diploma in Quantity Surveying and has Tan Sri Dato’ Lim is a businessman He graduated in 2003 with a acquired more than 30 years of with over 40 years of experience Bachelor of Arts in Business in-depth commercial experience in in the construction industry and Information Systems & Accounting property development, construction machinery related industry. from the University of Middlesex, and related activities. This includes He started his involvement in UK. building and civil engineering works, the construction industry soon design and build, turnkey projects, after completing his secondary He has been with the Iskandar trading in building materials, education, assisting the family Waterfront Holdings (“IWH”) reconditioning and rental of construction business. His Group since year 2003 serving in machinery. dynamism and vision coupled with various capacities and during his experience saw the companies tenure has amassed considerable He was previously Project Director that he leads grow by leaps and experience in management of PLS Plantation Berhad, which is bound. and property development & listed on the Main Market of Bursa investment. Prior to joining the Malaysia Securities Berhad. In the At present, he is the Executive IWH Group he worked with year 2000, he joined the Iskandar Chairman of Ekovest Berhad, a Knusford Berhad in the marketing Waterfront Holdings (“IWH”) Group Non-Independent Non-Executive department. He is a director of of Companies and was appointed Director of PLS Plantations Iskandar Waterfront Sdn Bhd and Group Head of Procurement and Berhad, all of which are listed on several other private companies. Contract Administration where he the Main Market of Bursa Malaysia was instrumental in the extensive Securities Berhad and also a He is a nephew of Tan Sri Dato’ upgrading and reclamation works Director of several other private Lim Kang Hoo and cousin of Datuk carried out by the IWH Group limited companies. His vast Lim Keng Guan and Mr. Lim Chen of Companies. Datuk Lim is experience in the construction Herng. presently Executive Chairman industry had been instrumental to of Lim Seong Hai Holdings Sdn the growth and development of the Bhd and holds directorships in Iskandar Waterfront Group. other private limited companies including Iskandar Waterfront Tan Sri Dato’ Lim is the father of Holdings Sdn Bhd. Mr. Lim Chen Herng. He is also the uncle of Datuk Lim Keng Guan Datuk Lim is the nephew of Tan Sri and Mr. Wong Khai Shiuan. Dato’ Lim Kang Hoo and cousin to Mr. Wong Khai Shiuan.

19 Governance Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT

The Board of Iskandar Waterfront City Berhad (“Company”) takes cognisance of the importance of adopting high standards of corporate governance in the Company as well as its subsidiaries (collectively, the “Group”) in order to safeguard stakeholders’ interests as well as enhancing shareholder value.

Pursuant to Paragraph 15.25 of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), this Corporate Governance Overview Statement (“Statement”) sets out how the Company has applied the 3 Principles and observed the Practices and Recommendations, of the Malaysian Code on Corporate Governance 2017 (“MCCG 2017”) issued by the Securities Commission Malaysia which took eff ect on 26 April 2017, for the fi nancial year ended 31 December 2018.

This Statement is to be read with the Corporate Governance Report 2018 (“CGR”), which is made available on the Company’s website at www.iwcity.com.my. Where a specifi c Principle or Practice of the MCCG 2017 has not been observed during the fi nancial year, the non-observation, including reasons thereof, and the alternative practice adopted, if any, is mentioned in the CGR.

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS

The Board recognises its key role in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fi duciary and leadership functions:

• Review, evaluate, adopt and approve the strategic plans and policies for the Group; • Oversee and monitor the conduct of the businesses and fi nancial performance and major capital commitments of the Group; • Review and adopt budgets and fi nancial results of the Group, monitor compliance with applicable accounting standards and the integrity and adequacy of accurate fi nancial information disclosure; • Review and approve any major corporate proposals, new business ventures or joint ventures of the Group; • Ensure adequate measures are taken to protect all assets of the group and maximise their potential; • Review, evaluate and approve any material acquisitions or disposals of undertakings and assets in the Group; • Identify principal risks and assess the appropriate risk management systems to be implemented to manage these risks; • Establish and oversee a succession planning programme for the Group, including the remuneration and compensation policy thereof; • Establish, review and implement corporate communication policies with the shareholders, investors, other key stakeholders and the public; • Review and determine the adequacy and integrity of the internal control systems and management information of the Group; and • Develop a corporate code of conduct to address, amongst others, any confl icts of interest relating to directors, major shareholders and/or management.

To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee, Nomination Committee, Remuneration Committee, Risk Management Committee, Tender Award Committee (“TAC”) and Employees’ Share Option (“ESOS”) Committee to examine specifi c issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.

All Board Committees with the exception of TAC, comprise only of Independent Non-Executive Directors. TAC being an operational unit, comprises of two Executive Directors and an Independent Non-Executive Director.

21 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS Cont’d

Board Charter

The Board is aware of the need to clearly demarcate the duties and responsibilities of the Board, Board Committees and Management, including the limits of authority accorded, in order to provide clarity and guidance to Directors and Management. The Board has in place a Board Charter, setting out, inter-alia, the roles of the Board, Board Committees, Executive and Non-Executive Directors and Management. The Charter serves as a reference point for Board activities to enable Directors to carry out their stewardship role and discharge their fi duciary duties towards the Company. The Board shall update the Charter as and when need arises to refl ect changes to the Company’s policies, procedures as well as to comply with the latest regulations and legislations.

The full Charter is available on the Company’s website.

The number of meetings of the Board and Board Committees held during the year were:

Types of Meetings Number of Meetings Board of Directors 5 Audit Committee 5 Nomination Committee 1 Remuneration Committee 1 Risk Management Committee 2 Tender Award Committee 10

The role of the Independent Non-Executive Chairman of the Board and the Executive Vice Chairman (“EVC”) are separate with each having a clear scope of duties and responsibilities. The distinct and separate roles of the Chairman and the EVC, with a clear division of functions and responsibilities, ensure a balance of power and authority, such that no one individual has unfettered powers of decision making. This crucial partnership dictates the long-term success of the Group. The Chairman plays a crucial and pivotal role in ensuring the leadership, eff ectiveness, conduct and governance of the Board, whilst the EVC has overall responsibility for the operational and business units, organisational eff ectiveness, implementation of Board policies, directives, strategies and decisions. The Board has delegated to the EVC the day-to-day management of the Group, supported by the Chief Executive Offi cer (“CEO”) and/or Executive Director and a team of experienced managers. The EVC is responsible for the executive function of the Group’s business and leading Management in implementing decisions and pursuing corporate objectives as approved by the Board. He may however delegate some of the day-to-day management to the CEO and/or the Executive Director while Non-Executive Directors do not participate in the day-to-day management of the Company, they contribute their expertise and experience to the development and monitoring of its corporate strategy.

Code of Ethics and Conduct and Whistle-blowing Policy

The Board recognises the importance of having in place a Code of Ethics and Conduct, setting out the standards of conduct expected from Directors and employees, to engender good corporate behaviour and has formalised such a Code, including uploading the same on the Company’s website. Meanwhile, the Board Charter sets out provision for disclosure and confl ict of interest to be observed by Directors. The Company’s Terms and Conditions of Service for employees also include provisions on conduct, which highlight, amongst others, the need to refrain from accepting any forms of gifts or inducement from interested or potentially interested parties.

The Board has also established and adopted a Whistle-Blowing Policy and Procedures document, which outlines when, how and to whom a concern may be properly raised about the actual or potential corporate fraud or breach of regulatory requirements involving employee, Management or Director in the Group.

The Code of Ethics and Conduct and Whistle Blowing policy are both made available on the Company’s website.

22 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS Cont’d

Sustainability of Business

The Board is mindful of the importance of business sustainability and in conducting the Group’s business, the impact on the environmental, social and governance aspects is considered in the Group’s corporate strategies.

The sustainability initiatives and activities undertaken by the Group for the fi nancial year ended 31 December 2018 are disclosed in the “Sustainability Statement” on Page 39, provided in this Annual Report.

Supply of and Access to Information

The Board is supplied with relevant information and reports on fi nancial, operational, corporate, regulatory, business development and audit matters, by way of Board reports or upon specifi c requests, for decisions to be made on an informed basis and for an eff ective discharge of the Board’s responsibilities. Any Director may at any time, request for additional information.

Timely dissemination of meeting agenda, including the relevant Board and Board Committees papers to all Directors prior to the Board and Board Committee meetings to give eff ect to Board decisions and to deal with matters arising from such meetings, is observed. Board members are furnished with pertinent explanation and information on relevant issues and recommendations by Management. The issues are then deliberated and discussed thoroughly by the Board before a decision is made.

In addition, Board members are updated on the Group’s activities and its operations on a regular basis. All Directors have access to information of the Company on a timely basis in an appropriate manner and quality necessary to enable them to discharge their duties and responsibilities.

Senior Management of the Group and external advisers are invited to attend Board meetings to provide additional insights and professional views, advice and explanations on specifi c items on the meeting agenda. Besides direct access to Management, Directors may obtain independent professional advice at the Company’s expense, if considered necessary, in furtherance of their duties. However, during the year, the Directors did not encounter any situations requiring such advice. This procedure is formalised in the Company’s Board Charter.

Directors have unrestricted access to the advice and services of the Company Secretaries to enable them to discharge their duties eff ectively. The Board is regularly updated and advised by the Company Secretaries, who are qualifi ed, experienced and competent on statutory and regulatory requirements, on the resultant implications of any changes in regulatory requirements to the Company and Directors in relation to their duties and responsibilities. The Company Secretaries, who oversee adherence to Board policies and procedures, brief the Board on the proposed contents and timing of material announcements to be made to regulators. The Company Secretaries attend all Board and Board Committee meetings and ensure that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. The removal of the Company Secretaries, if any, is a matter for the Board, as a whole, to decide.

Composition of The Board

The Board currently comprises nine (9) members, three (3) of whom are Executive Directors, one (1) Non- Independent Non-Executive Director, and fi ve (5) Independent Non-Executive Directors. The Company has also appointed one (1) Alternate Director. This composition fulfi ls the requirements as set out under MMLR of Bursa Malaysia, which stipulates that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent and in compliance with MCCG 2017, of which at least half of the board comprises independent directors. The profi le of each Director is set out in this Annual Report. The Directors, with their diff erent backgrounds and specializations, collectively bring with them a wide range of knowledge, skills, experience and expertise in areas such as public administration, property development, construction, quantity surveying, building and civil engineering, information systems, accounting and audit and legal.

23 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS Cont’d

Nomination Committee

The Nomination Committee (“NC”), established by the Board with specifi c terms of reference which is available on the Company’s website, comprises the following Directors as its members:

• Mr. Bernard Hilary Lawrence (Chairman) • Mr. Khoo Boon Ho • Dato’ Hj. Ayub bin Mion

The NC is primarily responsible for recommending suitable appointments to the Board, taking into consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should bring to the Board. It is also tasked to assess the eff ectiveness of the Board as a whole, the Board Committees and the contribution of each Director.

The fi nal decision on the appointment of Director in respect of a candidate recommended by the Nomination Committee rests with the Board. The Company Secretaries ensure that all appointments are properly made upon obtaining all necessary information from the Director.

During the fi nancial year under review, the Nomination Committee met once which was attended by all members and carried out an assessment of the Board, Board Committees and individual Directors in relation to their performance and contribution towards meeting the needs of the Company. The evaluation took into consideration the competency, experience, character, integrity and time availability, including the mix of skills, of the Directors concerned.

The Nomination Committee also recommended to the Board on those Directors who are retiring at the forthcoming Annual General Meeting for re-election. In addition, NC highlighted to the Board on the two Independent Non-Executive Directors who have served the Board for more than a cumulative term of 9-year are subject to re-designation as Non-independent Director. Given that the majority of the NC are the Directors involved in this matter, the Committee has abstained from making any recommendation to the Board but letting the Board to deliberate and recommend the continuation in offi ce of the Independent Non-Executive Directors who have been in offi ce, exceeded the 9-year tenure.

A Board diversity policy has been formalised to ensure that the Board comprises Directors of the required mix of skills and experience to assist the Company in achieving its objectives. However, insofar as Board diversity is concerned, the Board does not intend to set out any specifi c policy on targets for women Director, age or ethnicity composition in the Board. The Board believes that the on-boarding process of Directors should not be based on any gender, age or ethnic discrimination and instead evaluation of suitable candidates should be solely based on the candidates’ competency, character, time availability, integrity and experience in meeting the needs of the Company, including, where appropriate, the ability of the candidates to act as Independent Non-Executive Directors, as the case may be.

Remuneration Committee

The Remuneration Committee, established by the Board with specifi c terms of reference, comprises the following Independent Non-Executive Directors:

• Mr. Lim Foo Seng (Chairman) • Dato’ Hj. Ayub bin Mion • Mr. Bernard Hilary Lawrence

24 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS Cont’d

Remuneration Committee Cont’d

The Remuneration Committee (“RC”) assists the Board in recommending the remuneration of Directors. The RC meets as and when required to review Directors’ remuneration. However, at the request of the Executive Directors of the Company, all Executive Directors other than an Executive Director who holds Chief Executive Offi cer’s position, do not benefi t from any remuneration package except for the Directors’ allowance, at the same amount received by the Non-Executive Directors (other than the Chairman and the Audit Committee’s Chairman). In the case of Non-Executive Directors, the level of remuneration is determined by the Board as a whole and refl ects the experience and level of responsibilities undertaken by the Non-Executive Directors concerned. In all instances, the deliberations are conducted with the Directors concerned abstaining from discussions on their individual remuneration. During the year, the Committee met once which was attended by all members.

Tender Award Committee

The Tender Award Committee (“TAC”), established by the Board, is headed by the following directors of the Company, one of whom is an Independent Non-Executive Director:

• Tan Sri Dato’ Lim Kang Hoo • Mr. Khoo Boon Ho • Mr. Wong Khai Shiuan

In the absence of any of Executive Directors, any director may nominate other persons to attend the meeting. Besides, there are some senior management acting as the members of the TAC to assist the Board in the deliberation of the relevant tenders. The TAC meets regularly to review and award tenders for expenditure in excess of RM25,000. At all times the Independent director has attended the meetings during the year.

The TAC invites and considers Tenders for the supply of goods or services or works to be undertaken which are necessary for carrying out the objective of Procurement and Contract Administration and shall make decisions or recommendations on the acceptance or rejection of such Tenders.

The TAC ensures that procurement is geared to achieve the high quality of goods, services and construction which commensurate with the objectives. The TAC ensures accountability and transparency in all matters pertaining to tendering, procurement and contracting and also ensures the selection of all contractors and service providers is made on transparent, fair and cost-eff ective basis.

Reinforce Independence of the Board

The Independent Non-Executive Directors bring to bear objective and independent views, advice and judgment on interests, not only of the Company, but also of shareholders and stakeholders. Independent Non-Executive Directors are essential for protecting the interests of shareholders and can make signifi cant contributions to the Company’s decision making by bringing in the quality of detached impartiality. The Board has appointed Mr. Khoo Boon Ho as the Senior Independent Non-Executive Director to whom concerns may be conveyed by shareholders and other stakeholders.

25 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS Cont’d

Reinforce Independence of the Board Cont’d

The Board recognizes the importance of establishing criteria on independence to be used in the annual assessment of its Independent Non-Executive Directors. The defi nition on independence accords with the MMLR of Bursa. The independent directors also have made declaration of their Independence Status on a yearly basis to the Company. At end of the fi nancial year, there are two Independent Non-Executive Directors, namely Mr. Khoo Boon Ho and Mr. Bernard Hilary Lawrence, who have served for a cumulative period exceeding nine (9) years. Following the assessment on the tenure, contribution and independence of both Mr. Khoo and Mr. Bernard, the Board then recommended that both Mr. Khoo and Mr. Bernard to continue their service as the Independent Non-executive Directors, for the next fi nancial year. Key justifi cations for them be recommended for the continuance as Independent Non-Executive Directors are as follows:

• fulfi ls the criteria under the defi nition of Independent Non-Executive Director as stated in the Listing Requirements and, therefore, are able to bring independent and objective judgment to the Board; • their skills, competence and experience are pivotal in relation to the needs of the Board, Board Committees and also TAC in their deliberations; • their time commitment to the Company as evidenced by their meeting attendances at Board, Board Committee meetings and/or TAC Meetings; and • they have been with the Company long enough to understand the Group’s business operations which enable them to contribute actively during deliberations or discussions at the Board, Board Committees and/ or TAC Meetings.

Additionally, the Board is of the view that the independence of Directors cannot be assessed only based on the length of service, but that the true independence emanates from intellectual honesty, manifested through a genuine commitment to serve the best interests of the Company.

Foster Commitment of Directors

The Board ordinarily meets at least four (4) times a year, scheduled well in advance before the end of the preceding fi nancial year to facilitate the Directors in planning their meeting schedule for the year. Additional meetings are convened when urgent and important decisions need to be made between scheduled meetings. Board and Board Committee papers, which are prepared by Management, provide the relevant facts and analysis for the convenience of Directors. The meeting agenda, relevant reports and Board papers are furnished to Directors and Board Committee members well before the meeting to allow the Directors suffi cient time to study for eff ective discussion and decision-making during meetings. At the quarterly Board meetings, the Board reviews the business performance of the Group and discusses major strategic, operational and fi nancial issues. The Chairman of the Audit Committee briefs the Directors at each Board meeting the salient matters noted by the Audit Committee and which require the Board’s attention or direction. All pertinent issues discussed at Board meetings in arriving at decisions and conclusions are properly recorded by the Company Secretaries by way of minutes of meetings and the minutes are circulated in a timely manner.

26 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS Cont’d

Board Meetings

There were fi ve (5) Board meetings held during the fi nancial year ended 31 December 2018, with details of Directors’ attendance set out below:

Name of Director Attendance Dato’ Hj. Ayub bin Mion 5/5 Tan Sri Dato’ Lim Kang Hoo 3/5 Datuk Lim Keng Guan 4/5 Wong Khai Shiuan 5/5 Izaddeen bin Daud * 2/3 Khoo Boon Ho 5/5 Bernard Hillary Lawrence 5/5 Mohd Salleh bin Othman 5/5 Lim Foo Seng 5/5 Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman ** 2/2 Lim Chen Herng 0/5 (alternate director to Tan Sri Dato’ Lim Kang Hoo) Abd Razak bin Mohd Yusoff 3/3 (alternate director to Izaddeen bin Daud) * * resigned w.e.f. 5 June 2018 ** appointed w.e.f. 7 June 2018

It is the practice of the Company for Directors to devote suffi cient time and eff orts to carry out their responsibilities. All the Directors have met the stipulations of the MMLR on attendance at Board meeting.

Directors’ Training – Continuing Education Programmes

The Board is mindful of the importance for its members to undergo continuous training to be apprised of changes to regulatory requirements and the impact such regulatory requirements have on the Group.

During the fi nancial year, all Directors attended the in-house trainings organised by Corporate Administration Sdn Bhd entitled Re-designing New Business Values.

In addition, the Directors also attended several seminars as follows:-

Names of Director Training attended (a) Mr. Lim Foo Seng • Preparing the Bursa Sustainability Report Mr. Bernard Hilary Lawrence • Financial Insights for Listed Companies En. Mohd Salleh bin Othman (b) Mr. Khoo Boon Ho • Risk Awareness Session by Axcelasia Columbus Mr. Lim Foo Seng Sdn Bhd Mr. Bernard Hilary Lawrence Dato’ Hj. Ayub bin Mion Mr. Wong Khai Shiuan (c) Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman • Mandatory Accreditation Programme as required by the MMLR of Bursa Malaysia (d) Mr. Khoo Boon Ho • Prepared for SST2.0

27 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE A – BOARD LEADERSHIP AND EFFECTIVENESS Cont’d

Directors’ Training – Continuing Education Programmes Cont’d

The Directors continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role. Moving forward, training needs analysis will be conducted on individual Directors, considering the results of the assessment on the Board, Board Committees and individual Directors, to enable training programs to be developed.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

It is the Board’s commitment to present a balanced and meaningful assessment of the Group’s fi nancial performance and prospects at the end of each reporting period and fi nancial year, primarily through the quarterly announcement of Group’s results to Bursa Malaysia, the annual fi nancial statements of the Group and Company as well as the message to shareholders in the Annual Report.

Audit Committee

In assisting the Board to discharge its duties on fi nancial reporting, the Board has established an Audit Committee, comprising exclusively Independent Non-Executive Directors as below:

• Mr. Khoo Boon Ho (Chairman) • Dato’ Hj. Ayub bin Mion • Mr. Lim Foo Seng

The detailed composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report of page 31 in this Annual Report. One of the key responsibilities of the Audit Committee in its specifi c terms of reference is to ensure that the fi nancial statements of the Group and Company comply with applicable fi nancial reporting standards in Malaysia. Such fi nancial statements comprise the quarterly fi nancial report announced to Bursa and the annual statutory fi nancial statements.

A policy governing the provision of non-audit services by the external auditors, in view of maintaining their independence and objectivity, has been developed and adopted by the Audit Committee.

In assessing the independence of external auditors, the Audit Committee requires written assurance by the external auditors, confi rming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants.

Risk Management Committee

The Board has established a risk management process to identify, evaluate, control, report and monitor signifi cant risks faced by the Group. Periodic reporting of risk issues, including mitigating measures, is made by Management to the Risk Management Committee.

The Risk Management Committee, established by the Board with specifi c terms of reference, comprises the following Independent Non-Executive Directors:

• Mr. Lim Foo Seng (Chairman) • Mr. Bernard Hilary Lawrence • Mr. Khoo Boon Ho

28 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT Cont’d

Risk Management Committee Cont’d

The risk management framework of the Group seeks to, amongst others, formalize the Board’s risk appetite, use of key risk indicators and risk parameters, risk treatment plans and the formation of a Risk Management Committee, assisted by the management to follow up on risk management matters as well as action plans to address the fi ndings raised by the internal auditors and external auditors.

The internal audit function of the Group is outsourced to an independent professional fi rm, who undertakes regular reviews of the adequacy and operating eff ectiveness of the Group’s system of risk management and internal controls. The internal audit function reports directly to the Audit Committee. Further details on the internal audit function can be seen in the Audit Committee Report and the Statement on Risk Management and Internal Control included in this Annual Report.

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

The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. Accordingly, the Board has formalised pertinent policies and procedures not only to comply with the disclosure requirements as stipulated in the MMLR of Bursa Malaysia, but also identify the persons responsible to approve and disclose material information to the regulators, shareholders and stakeholders. To augment the process of disclosure, the Board has earmarked a dedicated section for corporate governance on the Company’s website where information on the Company’s announcements to the regulators, rights of shareholders, the Company’s Annual Report, etc., may be accessed.

Shareholder Participation at General Meeting

The Annual General Meeting (“AGM”) and/or Extraordinary General Meetings (“EGM”), are the principal forums for shareholder dialogue, allowing shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarifi cation on any issues and to gain better understanding of the Group’s business aff airs and performance. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Group’s operations in general. At the last AGM, a question and answer session was held where the Chairman invited shareholders to raise questions with responses from the Board.

Notices of each AGM are issued in a timely manner to all shareholders to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to the Group’s operations in general. All Special Resolutions passed by the shareholders at the previous AGM held on 7 June 2018, were all voted by poll.

The Company will continue to put all resolutions to vote by poll at future AGM.

Communication and Engagement with Shareholders

The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such, has various channels to maintain communication with them. The various channels are through the quarterly announcements on fi nancial results to Bursa Malaysia, relevant announcements and circulars, when necessary, the AGM and through the Group’s website where shareholders can access pertinent information concerning the Group.

29 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

CORPORATE GOVERNANCE OVERVIEW STATEMENT Cont’d

Statement of Directors’ Responsibility in Respect Of The Financial Statements

The Group’s fi nancial statements have been drawn up in accordance with the applicable approved accounting standards in Malaysia and the Companies Act, 2016. The fi nancial statements give a true and fair view of the state of the aff airs of the Group at the end of the fi nancial year, and of the fi nancial performance and cash fl ows for the fi nancial year.

In preparing the fi nancial statements, the Directors are also responsible for:

• The adoption of suitable accounting policies and applying them consistently; • Making judgments and estimates that are reasonable and prudent; • Ensuring that all applicable fi nancial reporting standards have been followed; and • Preparing fi nancial statements on a going concern basis as the Directors have reasonable expectations, having made enquiries that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.

The Directors have the responsibility of ensuring that the Company maintains adequate accounting records and suffi cient internal controls to safeguard the assets and to prevent and detect fraud or other irregularities in the Group.

Directors’ Remuneration

In compliance with the MMLR, the remuneration paid to the Directors, in aggregation are as follows: FOR THE YEAR 2018 Fees Salaries and other Estimated value of TOTAL emoluments benefi ts in kind RM '000 RM '000 RM '000 RM '000 Company Executive directors Tan Sri Dato' Lim Kang Hoo 36 2 - 38 Datuk Lim Keng Guan 36 3 - 39 Wong Khai Shiuan 36 834 44 914

Non-Executive directors Dato’ Hj. Ayub bin Mion 72 6 - 78 Khoo Boon Ho 48 7 - 55 Bernard Hilary Lawrence 36 4 - 40 Mohd Salleh bin Othman 36 2 - 38 Lim Foo Seng 36 7 - 43 Dato’ Hj. Mohd Noorazam Bin Dato’ Hj. Osman 20 1 - 21 Izaddeen bin Daud 16 1 - 17 Abd Razak bin Mohd Yusoff - 1 - 1 Lim Chen Herng - - - -

SUB-TOTAL 372 868 44 1,284

Subsidiaries Datin Paduka Hjh Aminah binti Hashim 36 1 - 37 Dato’ Hj. Md Zahari bin Md. Zin 36 2 - 38

TOTAL 444 871 44 1,359

Also, the details of the remuneration of the senior management which consists of the Executive Directors and Chief Executive Offi cer, have also been disclosed under the remuneration of the individual directors, and the bands of the said personnel are as follows:

Remuneration band (RM) Group Executive directors and key senior management Up to 50,000 2 900,001 to 950,000 1 Total 3

This Statement has been approved by the Board on 27 February 2019. 30 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

AUDIT COMMITTEE REPORT

1. COMPOSITION

The Audit Committee (the “Committee”), which was established by the Board, comprises the following Directors as its members:

Chairperson : Mr. Khoo Boon Ho (Senior Independent Non-Executive Director)

Members : Dato’ Hj. Ayub bin Mion (Independent Non-Executive Director) Mr. Lim Foo Seng (Independent Non-Executive Director)

2. ROLE OF THE AUDIT COMMITTEE

The Audit Committee has been entrusted by the Board with the following responsibilities that encompass overseeing the fi nancial reporting process and the audit processes:

• to review the Group’s quarterly and annual fi nancial statements; • to assess the Group’s internal control system; • to review the independence of the Group’s internal and external auditors and the processes adopted by the auditors; and • to review the Recurrent Related Party Transactions to ensure they are not detrimental to the minority as well as any confl ict of interest situations.

3. KEY FUNCTIONS AND RESPONSIBILITIES

The key functions and responsibilities of the Audit Committee are to review the following and report the same to the Board:

• the audit plan, evaluation of the system of internal controls and the audit report with the external auditors, including the assistance given by employees of the Group to the external auditors; • review any management letter sent by the external auditors to the Company and Management’s response to such letter; • review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work. This includes determining whether the internal audit function deploys internal auditing standards that are recognised by professional bodies; • review the internal audit programmes, processes, the major fi ndings and results of the internal audit or investigations undertaken and whether or not appropriate action is taken on the recommendation of the internal audit function; • the quarterly results and year-end fi nancial statements, prior to approval by the Board of Directors, focusing on: - any changes in accounting policies and practice; - major judgmental areas; - signifi cant adjustments resulting from the audit; - going concern assumptions; - compliance with accounting standards, stock exchange and other legal requirements; - assess the quality and eff ectiveness of internal control system; and - any signifi cant transactions which are not a normal part of the Group’s business; • any related party transactions and confl ict of interest situation that may arise within the Company and Group, including any transaction, procedure or course of conduct that raises questions of management integrity; • any letter of resignation from external auditors; • whether there is any reason (supported by grounds) to believe that external auditors are not suitable for re-appointment, including the assessment of their professional independence and performance; • recommend the nomination of person or persons as external auditors; • establish a policy on the provision of non-audit services by the external auditors and/or their network members fi rms/companies to minimize the risk of the external auditors’ independence and objectivity from being impaired; • any other function as may be required by the Board from time to time.

31 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

AUDIT COMMITTEE REPORT Cont’d

4. SUMMARY OF WORK OF THE INTERNAL AUDIT

The Company outsourced its internal audit function to an independent professional fi rm, which reports directly to the Audit Committee. The internal audit function assists the Audit Committee in reviewing the adequacy and operating eff ectiveness of the system of governance, risk management and internal control, based on an internal audit plan approved by the Audit Committee before internal audit work is carried out. The scope of internal audit covers all operating units, including key subsidiaries, as set out in the letter of appointment of the internal audit function. Further details of the internal audit function and its activities are mentioned in the Statement on Risk Management and Internal Control included in the Annual Report.

5. SUMMARY OF ACTIVITIES UNDERTAKEN BY THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR

The Audit Committee met fi ve (5) times during the fi nancial year ended 31 December 2018. The attendances of each member of the Committee were as follows:-

Name Designation Meetings Attended Khoo Boon Ho Senior Independent 5/5 Non-Executive Director Dato’ Hj. Ayub Bin Mion Independent Non-Executive 5/5 Director Lim Foo Seng Independent Non-Executive 5/5 Director

The Audit Committee members were served with meeting agenda and relevant Board papers which were distributed, with adequate notice, before the meeting to enable them to go through the matters to be deliberated at the meeting. The Company Secretaries are the secretaries of the Audit Committee.

During the fi nancial year under review, the Audit Committee carried out the following activities:

• reviewed the quarterly fi nancial announcements of the Group before recommending the same to the Board of Directors for approval; • reviewed the audit plan of the external auditors and the proposed fees for the statutory audit; • reviewed the performance of the external auditors in terms of their capability and professionalism before recommending them to be considered for re-appointment at the Annual General Meeting; • reviewed the audited annual fi nancial statements of the Group and the Company before recommending the same to the Board of Directors for approval; • reviewed the internal audit reports and the recommendations on internal audit observations, including follow-up by the internal audit function on the status of Management’s implementation of action plans to address issues highlighted in previous reports of the internal audit function; • reviewed and evaluated the performance of the internal audit function and approved the renewal of their appointment; • reviewed recurrent related party transactions within the Group; • reported to the Board on its activities and signifi cant fi ndings and results; • reviewed the Audit Committee Report and Sustainability Statement for inclusion in this Annual Report; • reviewed the new accounting policies adopted by the Group to ensure compliance with the applicable Malaysian Financial Reporting Standards; and • had two private session meetings with the External Auditors without Management during the year under review.

During the year, there was no occasion where the Audit Committee members had to call a special meeting to investigate areas of misconduct.

This Audit Committee Report has been approved by the Board on 27 February 2019.

32 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

Introduction

Paragraph 15.26 (b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa”) stipulates that a listed issuer must ensure that its Board of Directors makes a statement about the state of internal control of the listed issuer as a group. Accordingly, the Board of Directors (“Board”) is pleased to furnish the statement, which outlines the nature and scope of the risk management and internal control system in the Group (comprising the Company and its subsidiaries) for the fi nancial year ended 31 December 2018 and up to the date of approval of this Statement for inclusion in the Annual Report of the Company. For the purpose of disclosure, this statement takes into consideration the “Statement on Risk Management and Internal Controls - Guidelines for Directors of Listed Issuers” (the Guidelines”), issued by the Task Force on Internal Control with the support and endorsement of Bursa.

The Board acknowledges its overall responsibility for the Group’s system of risk management and internal control to safeguard shareholders’ investment and the Group’s assets as well as reviewing its adequacy and operating eff ectiveness in meeting the Group’s objectives. The Board is mindful of the need to establish clear roles and responsibilities in discharging its fi duciary and leadership functions in line with Practice Note 1.1 of the Malaysian Code on Corporate Governance 2017 (“MCCG 2017”). Accordingly, the Board is aware that its principal responsibilities, as outlined in the Commentaries of the same Recommendation of the MCCG 2017, include, inter-alia, the following:

• to identify principal risks faced by the Group and ensure the implementation of appropriate controls and mitigation measures to address the risks; and • to review the adequacy and integrity of the management information and internal control system of the Group.

The Board is also mindful of its role under Practice 9.1 of the MCCG 2017 in establishing a sound framework to manage risk. The Group has put in place a risk management process to identify and evaluate signifi cant risks, comprising strategic, fi nancial and operational risks as well as a system of internal control to mitigate such risks that are outlined below:

• Business Risk

Property development is the subject to certain business risks inherent in the industry including but not limited to, changes in general economic conditions, government regulations, infl ation, competition from existing players and new entrants, shortage of labour for project completion, disruption in the supply of building materials, non-renewal of licenses and risks relating to the fi nancing of projects.

Management will continue to limit and mitigate these risks through the implementation of prudent business strategies, continuous review of the operations and marketing strategies, eff orts taken to improve effi ciency, as well as close monitoring of its Development Project and its cash fl ows, there can be no assurance that any changes to these risks would not have any material adverse impact on IWCity Group’s business.

• Financing and interest rate risk

IWCity Group’s working capital requirements such as reclamation works and development projects may be partially funded via interest-bearing bank borrowings. As such, future fl uctuations in interest rates could aff ect the interest charges incurred on the borrowings and hence aff ect IWCity Group’s profi tability. Fluctuations in interest rates may also aff ect the demand for properties under the Company’s Proposed Development plans, as higher interest rates may lead to an increase in the prices of the properties for prospective buyers. This may adversely aff ect the demand for properties and ultimately, the success of the Company’s plans for the Proposed Development.

33 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Cont’d

Introduction Cont’d

• Financing and interest rate risk Cont’d

In mitigating these risks, IWCity Group actively reviews its debt portfolio taking into account the level and nature of borrowings and manage our gearing level, interest costs and our cash fl ows to achieve an optimal capital structure to address the above risks. Depending on market conditions, IWCity Group will also review its pricing strategy to ensure that IWCity Group’s properties are competitively priced.

• Development risks

Development is subject to certain risks inherent to property development, such as oversupply of the properties to be developed, changes in demand for types of residential and commercial properties, labour and material supply shortages, deterioration in prevailing market conditions and fl uctuations in prices of building materials and costs of labour. Nevertheless, IWCity Group continues to keep abreast with the latest developments in the property development market and will leverage on its track record as well as experienced, capable and dedicated management team in place, to manage these risks closely.

The timely development and launch of properties will be dependent on external factors that may be beyond the control of IWCity Group, such as obtaining timely approvals from the relevant regulatory authorities, possible tight supply of labour as well as the timely and satisfactory performance of contractors appointed to construct the developments. However, the Board and Management of IWCity Group will limit these risks through, inter-alia, careful planning and proactive and close monitoring of the progress of development and endeavor to come up with solutions in order to ensure timely completion of the development.

• Economic and political considerations

IWCity Group’s future growth and profi tability depends largely on the economic and political conditions in Malaysia. Factors that could adversely aff ect the successful development include, but are not limited to, changes in interest rates, infl ation, economic growth, taxation, accounting policies, changes in laws and regulations, government policies and political stability. Any adverse changes in these conditions, such as prolonged economic downturn, could have a negative eff ect on the property development industry, which IWCity Group operates in.

While IWCity Group practices prudent fi nancial risk management and effi cient operating procedures, there is no assurance that adverse economic and political developments, which are beyond the control of IWCity Group, will not materially and adversely aff ect IWCity Group.

In view of the limitations inherent in any system of risk management and internal control, the system is designed to manage, rather than eliminate, the risk of failure to achieve the Group’s objectives. The system can, therefore, only provide reasonable, but not absolute assurance, against any material misstatement or loss.

Risk Management Process

The Board recognizes the importance of risk management to safeguard shareholders’ investment and the Group’s assets. Accordingly, it has deployed a process, during the fi nancial year under review, to identify and evaluate signifi cant business risks faced by the Group with a view to manage them. Management is entrusted to identify such risks for onward reporting to the Board so that remedial measures may be taken to mitigate the risks as appropriate. For each risk identifi ed, the risk management process includes assessing the likelihood of its occurrence and the impact thereof. The signifi cant risks faced by the Group, including action plans to mitigate risks within acceptable levels, are reported by Management to the Board at least once a year.

34 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Cont’d

Risk Management Process Cont’d

As part of the Group’s Risk Management Process, a Risk Management Committee (“RMC”), chaired by an Independent Non-Executive Director, has been established to perform, amongst others, the following:

• overseeing the risk management structure; • reviewing and recommending risk management strategies, policies and framework for identifying, measuring, monitoring and controlling risks; • developing and implementing internal compliance and control systems and procedures to manage risks; and • communicating and monitoring risk assessment results to the Board.

The RMC meets periodically to consider principal risks evaluated by the respective risk owners that may impede the Group from achieving its strategic and operational objectives, as well as develop action plans to mitigate such risks.

During the fi nancial year under review, the results of risk updates deliberated at the RMC meetings, i.e. the internal controls to address key risks identifi ed, which were also used as the basis to develop a risk-based internal audit plan for the fi nancial year ended 31 December 2018, which was approved by the Audit Committee.

The risk management process has been in place for the fi nancial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company.

Internal Control System

The Group has an established organizational structure with clearly defi ned lines of responsibilities and appropriate levels of delegation and authority. Key duties are segregated amongst diff erent personnel of major business divisions, such as operations, fi nancial management and reporting, capital expenditure management and investments. A process of hierarchical reporting is established which provides for a documented and auditable trail of accountability.

The system of internal control entails, inter-alia, the proper delegation of duties and responsibilities from the Board to the Executive Vice Chairman, Executive Directors and Senior Management (collectively, the “Management”), with specifi ed limits of authority, in running the key operations of the Group. In this respect, Management essentially comprises personnel with signifi cant years of experience and who are in a position to identify and manage business risks relevant to the Group and design appropriate internal controls to manage these risks.

On a regular basis, the Executive Vice Chairman and/or the Executive Directors communicate the Board’s strategy on risks and control throughout the Group which encompasses the Company’s values and policies, Management’s philosophy and risk attitude, as well as organisational structure together with the respective authority and responsibility of each employee.

The Board and Management also established broad operating strategies whereby annual budgets are developed in line with these strategies. Progress made towards achieving business objectives and operating results are monitored on a regular basis by the Executive Vice Chairman and Executive Directors via various management and operational discussions as well as the review of fi nancial and operational reports. Any matters arising are promptly and effi ciently dealt with, drawing on the experience and knowledge of employees throughout the Group. The Executive Vice Chairman and Executive Directors, in turn, will update the Board on any signifi cant matters which require the latter’s attention.

35 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Cont’d

Internal Control System Cont’d

Salient features of the system of internal control within the Group are summarized as follows:

• defi ned management structure of the Group and clear delegation of authority to Board Committees and Management where authority levels have been formalised; • regular reporting to the Executive Vice Chairman, Chief Executive Offi cer and Senior Management on operational matters and fi nancial results as well as key performance indicators; • regular Management and departmental discussions where operating strategies, initiatives and fi nancial matters are deliberated; • an annual budgetary process where each subsidiary has to submit a budget and a business plan to the Group management for review and approval, which is then tabled to the Board for deliberation; and • established operating policies and procedure, code of conduct and other relevant human resource policies are contained within the Group’s policies and operating procedures and Terms and Conditions of employment.

The Group’s system of risk management and internal control applies principally to the Group and its subsidiaries but do not apply to the associates and joint venture. The Group’s interest in the associates and joint venture is served through Board representatives. These representatives also provide the Board with information for timely decision-making on the continuity of the Group’s investments based on the performance of the associate and joint venture.

Internal Audit Function

The Group’s internal audit function is outsourced to an independent professional fi rm, which is guided by the International Professional Practices Framework (“IPPF”) of the Institute of Internal Auditors (“IIA”), an international professional association of internal auditors, in carrying out internal audit assignments on the Group. The internal auditors, whom report directly to the Audit Committee, assist the Board in assessing the adequacy and operating eff ectiveness of the internal control system established by Management based on an agreed scope of work as outlined in an Annual Internal Audit Plan tabled to, and approved by, the Audit Committee during the fi nancial year. There was no restriction placed upon the scope of the Internal Audit function’s work and the internal auditor was allowed full and unrestricted access to the records pertinent for the internal audit and relevant personnel of the Group.

During the fi nancial year under review, the Audit Committee reviewed the work of the internal audit function, its observations and recommendations to ensure that the Audit Committee obtained the necessary level of assurance with respect to the adequacy and operating eff ectiveness of the system of risk management and internal control. The internal auditors report their observations, including Management’s response and action plans thereof, directly to the Audit Committee. The internal auditors also follow up and report to the Audit Committee the status of implementation by Management on recommendations highlighted in the previous internal audit reports.

Further details of the Internal Audit Function are set out in the Audit Committee Report on pages 31 to 32 of this Annual Report.

The costs incurred for the internal audit function for the fi nancial year amounted to approximately RM35,000.

Assurance by the management

The Board has also received reasonable assurance from the Executive Vice Chairman and Chief Executive Offi cer as the Company’s highest-ranking executive that the Group’s risk management and internal control system has operated adequately and eff ectively, in all material aspects, for the fi nancial year under review and up to the date of approval of this Statement for inclusion in the Annual Report.

36 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Cont’d

Board’s comments on the adequacy and eff ectiveness of the Group’s risk management and internal control system

The Board, through its Audit Committee, has reviewed the adequacy and operating eff ectiveness of the risk management and internal control system of the Group and that relevant actions have been or are being taken, as the case may be, to remedy internal control weaknesses identifi ed from the review, which was largely based on the outcome of observations raised by the internal auditors and external auditors directly to the Audit Committee.

The Board is of the view that there have been no weaknesses in the system of risk management and internal control that resulted in material losses, contingencies or uncertainties that would require mention in the Company’s Annual Report. The Board, through Management, continues to take measures to strengthen the Group’s risk management and internal control system from time to time based on recommendations of the internal auditors as well as the external auditors.

The external auditors have reviewed this Statement according to Paragraph 15.23 of the MMLR of Bursa and reported that nothing has come to their attention that causes them to believe that the Internal Control Statement intended to be included in the Annual Report of the Company is not prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Guidelines to be set out, nor is factually inaccurate.

This statement has been approved by the Board on 27 February 2019.

37 Corporate Sustainability Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

SUSTAINABILITY STATEMENT

Introduction

As one of the largest owners of waterfront land in Malaysia, IWCity recognises the importance of ensuring its business’ sustainability and that it has a responsibility to manage the impact that its business has on its stakeholders including employees, environment and the community as a whole.

Our Mission is to build a sustainable development area that promotes quality and innovative products with excellent services that meet customers’ need, ensure high standards of governance across the Group’s operations, promote and cultivate responsible business practices within the Group and ultimately ensuring equitable shareholders’ returns. Our Vision is to become a leading integrated property developer and builder that focus on community living and quality development.

This Sustainability Statement is prepared in accordance with Bursa Malaysia Securities Berhad’s Sustainability Reporting Guidelines and the Main Market Listing Requirements.

IWCity Sustainability Transformation Process or “STP”

We aim to integrate sustainability strategic direction of our business in order to achieve long term value creation for our business while supporting business continuity and competitiveness over the long term. Such change has been well planned and organised in order to achieve positive results. A set of implementation plans towards integrating sustainability, have been carried out in 3 stages as follows:

1. Initial Stage

Legislative and regulatory constraints had been taken into consideration to ensure that there are no breaches in implementing our sustainability action plan. At this stage, we have placed compliance as a priority focusing on matters such as occupational safety and health issues.

2. Strategic Stage

Emphasis has been placed on key material sustainability risks and opportunities. We are engaged with stakeholders and incorporate sustainability into our products and services. With the completion of this stage, we identify and adopt several key sustainability reporting themes.

3. Transformational Stage

Final stage of the STP is to increase focus on the entire value change process, with value creation as a priority. An important part of this process will be establishing collaborative relationships with all our stakeholders and forming innovative partnerships.

Governance Structure

The Board of Directors continues to oversee the sustainability matter of the Group and to provide guidance to the Group towards ingraining sustainability as part of the corporate culture. This process has begun by targeting to make sustainability part of the Board’s agenda and strategy. In order to establish an ideal governance structure to manage IWCity’s sustainability matters and the STP, we begin by determining our level of maturity in embracing sustainability, including the level of expected response towards sustainability. Following that, our Board considers how best to integrate sustainability to complement our business strategy.

39 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

SUSTAINABILITY STATEMENT Cont’d

Governance Structure Cont’d

For eff ective sustainability monitoring and execution, the governance structure which has been endorsed and approved by the Board of Directors, is depicted below:

Board of Directors

Audit Committee and Risk Management Committee

Executive Vice Chairman / Chief Executive Offi cer

Sustainability Working Group Consists of various Manager and HOD

In order to achieve effi ciencies, rather than creating a separate committee for sustainability, the Audit Committee and Risk Management Committee have rendered and continue to render their support to the Board. Their roles and responsibilities are expected to include the following:

• Advising the Board and recommending to it, business strategies in the area of sustainability; • Monitoring the implementation of sustainability strategies as approved by the Board; • Recommending sustainability-related policies for adoption to the Board, and monitoring the implementation of the policies; • Recommending material approval sustainability matters to the Board; • Overseeing the overall management of stakeholder engagement, including ensuring grievance mechanisms are in place; • Overseeing the management of sustainability matters, with particular focus on matters material to the organisation; and • Overseeing the preparation of sustainability disclosures as required by laws and/or rules, and recommending to the Board for approval.

Nonetheless, embedding sustainability as part of IWCity’s corporate culture will only be possible with strong leadership and hence it is our Executive Vice Chairman and Chief Executive Offi cer who have stepped up to the task of incorporating sustainability into our business strategies and business decisions. Playing a supporting role will be the newly established Sustainability Working Group comprising of various Heads of Departments and Managers.

Material Sustainable Matters

We have used the materiality assessment process method to identify and assess material sustainable matters for IWCity. The key sustainable matters which are identifi ed as follows:

• economic impact • environmental impact • our employees • communities in areas where we operate • other stakeholders’ engagement

The above are identifi ed by the Sustainability Working Group as matters which refl ect IWCity’s signifi cant economic, environmental and social impacts. 40 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

SUSTAINABILITY STATEMENT Cont’d

Material Sustainable Matters Cont’d

The material sustainable matters were identifi ed and agreed upon by the Board, the following material sustainable objectives were formulated:

Economic Impact

• Creating positive economic impact from our business • To ensure the Group’s procurement system is fair and geared to achieve high quality of goods, services and construction • To invite and consider quality tenderers for the supply of goods or services or work to be undertaken • Employment opportunities by creation of new jobs

During the year, we focused on enhancing brand value and reputation by participating road shows such as FengShui Extravaganza, MAPEX 2018, Malaysia Home and Investment Expo, Mipex Property Roadshow, etc, and event such as sponsorship given to Johor Bahru Chinese Chamber of Commerce & Industry ‘s Chinese New Year Dinner. In addition, via our Tender Awards Committee, we have implemented a fair and diversifi ed procurement policy to provide opportunities to support upcoming suppliers and sub-contractors.

Preserving the Environment

• To achieve high standards in environmental management • To protect, conserve and enhance the surrounding environment and natural resources • To take pro-active guidelines and constantly studying, implementing guidelines and executing initiatives to clean and rejuvenate rivers, enhance water quality, reforestation, reduce and minimise and possible adverse impact towards the environment • To commit to keep our environment clean for the benefi t the community and future generations • To ensure effi cient use of water and energy

IWCity recognises the importance of environmental preservation and protection in all of our business activities. As a responsible company, we believe in incorporating environmentally friendly initiatives in all our daily business operations and project developments. In our offi ces we promote green awareness amongst our employees and encouraging conservation of electricity and water. In 2018, with the kick start of the new Danga Sutera Project, we are proud to announce that water usage and energy consumption have been kept at below 2% of the total operating expenses.

Within our developments, we allocate a generous proportion as green areas. For example, our Botanika development has reserved more than 6 acres for landscaping and greenery which is outstanding considering that the project site measures approximately 12 acres.

Another area of focus is management of waste and recycling. For our projects, contractors are required to adhere to strict waste management and recycling practices to minimise construction waste and to recycle wherever possible. In both of our Danga Sutera and Botanika project, we have established specifi c locations for waste management and recycling to facilitate environmentally friendly practices by its residents.

In our workplace, we practice environmental awareness. A major initiative to save the trees has been ongoing for the past few years where we minimise printing and instead view documents on computers. Where printing is necessary, we practice double sided printing which eff ectively halves paper consumption. During lunchtime and after working hours, lights and air-conditioning is switched off in order to conserve electricity.

41 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

SUSTAINABILITY STATEMENT Cont’d

Employee Welfare

• To enable employees to further develop their professional and personal skills via exposure to diverse and comprehensive range of learning and development opportunities • To assess the training needs for the employees and identify the training to fi ll the skills and knowledge gaps • To encourage direct engagement between employees and management such as open communication and grievances sharing • To maintain a safe and healthy workforce and to provide safety and health to necessary employees • To monitor work place conditions and monitor work related injuries, types of injuries and injury rate • Occupational Safety and Health audit is conducted on a periodic basis in conjunction with ISO certifi cation audit

Building a strong team is one our highest priorities as we realise that the success of the Group depends on our employees. Through eff ective human resource strategies, we are committed to building a competent and high-performance team that will drive profi tability for the Group. Training is an important part of improving our employee’s skill sets and knowledge and towards that we spent 446 training hours in 2018.

Employee engagement in another important component of our Human Resource policies with multiple platforms and opportunities for employees to engage frequently and honestly with the management. These include annual performance reviews, sharing sessions and ad-hoc Get-Together events such as Hari Raya and Chinese New Year celebrations.

We strongly believe in workforce diversity including of adherence to national bumiputera and gender diversifi cation policies. We presently have 57 employees of which 67% are bumiputera and 49% are female.

Employees of IWCity enjoys being rewarded in line with Company performance. Annual increments and bonus are awarded based on company performance, individual performance and achievements during the year. In addition, employees are granted comprehensive and competitive benefi ts including maternity leave, health benefi ts and allowances for phone and travelling.

We keep track of the latest salary trends to ensure that our remuneration is line with the market and that our turnover rates are below our industry peers.

Caring for the Community

• To align our charitable giving with the Group’s activities • To maintain regular contact with the communities and authorities • To work closely with the local councils to promote a well-balanced and harmonious community • To continue improve public perception and experience of the Group • To support and encourage community development • To ensure ISO certifi cation and various operational licenses are procured • Welcoming feedback from the public

42 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

SUSTAINABILITY STATEMENT Cont’d

IWCity believes in putting the community fi rst in carrying out its business of providing quality products and building sustainable developments. This is refl ected in our practice of reaching out and giving back to the community, especially the underprivileged segments of society through our corporate social responsibility programme. Highlights of our corporate social responsibility programme in 2018 are as follows:

1. Iskandar Waterfront Chinese New Year “Chap Goh Meh” Celebration held on 2 March 2018

This is one of our signature events every year. We commemorate local authority and government agencies whom we work very closely and additional to less unfortunate association, we contribute in terms of monetary for their disposal. As a master developer for Flagship A in Iskandar Malaysia, we invite public to rejoice the Chinese New Year celebration with us. In addition, we had great honour of His Majesty Sultan Ibrahim Ibni Almarhum Sultan Iskandar, Sultan Yang Dipertuan Bagi Negeri dan Jajahan Takluk Johor Darul Ta’zim to join us, to make the celebration a success and meaningful.

43 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

SUSTAINABILITY STATEMENT Cont’d

2. Majlis Penyerahan Kunci Penempatan Semula Desa Jaya, held on 30 March 2018

Pangsapuri Desa Jaya is a collaboration between State Secretary Incorporated Johor and Bayou Bay Development Sdn Bhd under purview Unit Perancangan Ekonomi Johor (UPEN) programme. A total of 320 apartment units built on 8.4 acres of land, catered mainly for the residents involved in the relocation of Kampung Bakar Batu and Kampung Desa Jaya to make way for development in Permas Jaya.

3. Health Awareness Day held on 29th August 2018

The campaign was jointly organized by IWCity, Iskandar Regional Development Authority, Iskandar Investment Bhd and Regency Hospital. The programs of the event consist of blood donation, health talk from Regency’s specialist (Cardio and Dietitian), optometrist and health screening. in enhancing health awareness and education; promote wellness programs. This campaign has received overwhelmed responses with more than 200 participants.

44 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

SUSTAINABILITY STATEMENT Cont’d

Other stakeholders’ engagement

• To ensure material corporate information are made available to our investors and customers • To ensure adherence of regulatory compliance and corporate governance transparency • To maintain good relationship with vendors and suppliers

We fi rmly recognise continual and active engagement with various stakeholders will boost business development and maintain healthy sustainable business practices.

IWCity ensures all corporate information such as quarterly results, fi nancial results, circular and annual report are made available on Bursa Malaysia’s website and the Company website, on a timely manner. By doing so, stakeholders are informed with material business matters in relation to the Company. In addition, shareholders can get in-depth information of the Company at general meeting(s).

We also engage with our customers and/or potential customers via the Company’s website, brochures and social media on the Company’s information and products. We entrust our experienced and accountable sales and marketing team to be approachable by the customers.

Notwithstanding the above, we also ensure regulatory compliances are adhered to by understanding the mandates and regulatory policies. Transparent corporate governance practice is closely monitored within the Group via respective department heads.

Lastly, we also ensure relationship with vendors and suppliers are taken care. Standard operating procedures of contract negotiation, supplier audit, evaluation, registration and tendering are put in place to ensure fair and equitable treatment to the vendors and suppliers.

Conclusion

IWCity is always mindful of our role as a responsible developer and our commitment towards our stakeholders. It is important for us to ensure the sustainability of the Group business by keep improving our sustainability practices within the Group. We will ensure that the progress of our achievement of the material sustainable objectives will be carefully monitored by the Sustainability Working Group and reported back to the Chief Executive Offi cer on a regular basis. IWCity is regularly having meetings or discussion on its material sustainability matters on an annual basis in order to ensure recent developments and changes have been incorporated and considered. This review will include internal and external factors including changes in supply chain, global legislation and regulations.

This statement has been approved by the Board on 10 April 2019.

45 Contents Directors' Report 47

Statement By Directors 53

Statutory Declaration 53

Independent Auditors’ Report 54

Statements Of Comprehensive Income 60

Statements Of Financial Position 61

Statements Of Changes In Equity 64

Statements Of Cash Flows 68

Notes To The Financial Statements 70 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

DIRECTORS’ REPORT

47 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

DIRECTORS’ REPORT Cont’d

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Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ISKANDAR WATERFRONT CITY BERHAD Cont’d  
 
 
  

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55

Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ISKANDAR WATERFRONT CITY BERHAD Cont’d  


 


   
 

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57 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018 *URXS &RPSDQ\ 1RWH     50  50  50  50  5HVWDWHG

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60 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2018 *URXS 1RWH    50  50  50  5HVWDWHG 5HVWDWHG $VVHWV 1RQFXUUHQWDVVHWV 3URSHUW\SODQWDQGHTXLSPHQW       ,QYHQWRU\SURSHUWLHV/DQGKHOG IRUSURSHUW\GHYHORSPHQW  D       ,QYHVWPHQWSURSHUWLHV       ,QYHVWPHQWLQDVVRFLDWHV       ,QYHVWPHQW       'HIHUUHGWD[DVVHWV           

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61 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

STATEMENTS OF FINANCIAL POSITION Cont’d AS AT 31 DECEMBER 2018 *URXS 1RWH    50  50  50  5HVWDWHG 5HVWDWHG (TXLW\DWWULEXWDEOHWR RZQHUVRIWKHSDUHQW 6KDUHFDSLWDO       6KDUHSUHPLXP      (PSOR\HHVKDUHRSWLRQUHVHUYH       5HWDLQHGHDUQLQJV DFFXPXODWHGORVVHV       7RWDOHTXLW\     

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62 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENTS OF FINANCIAL POSITION Cont’d AS AT 31 DECEMBER 2018

Company Note 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000 Assets Non-current assets Property, plant and equipment 13 389 438 446 Investment in subsidiaries 16 508,596 508,596 508,596 Other receivables 20 78,652 78,652 - 587,637 587,686 509,042

Current assets Other receivables 20 184,177 186,511 162,811 Prepayments 20 60 - Cash and bank balances 23 1,798 1,566 2,004 185,995 188,137 164,815

Total assets 773,632 775,823 673,857

Equity and liabilities Current liabilities Loans and borrowings 24 - - 100,000 Other payables 26 3,575 4,066 3,698 3,575 4,066 103,698

Net current assets 182,420 184,071 61,117

Non-current liability Loans and borrowings 24 100,000 100,000 -

Total liabilities 103,575 104,066 103,698

Net assets 670,057 671,757 570,159

Equity attributable to owners of the parent Share capital 29 726,946 726,946 368,350 Share premium 30 - - 251,775 Employee share option reserve 31 56,187 64,110 - Accumulated losses (113,076) (119,299) (49,966) Total equity 670,057 671,757 570,159

Total equity and liabilities 773,632 775,823 673,857

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

63 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018

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65 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

STATEMENTS OF CHANGES IN EQUITY Cont’d FOR THE YEAR ENDED 31 DECEMBER 2018

66 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENTS OF CHANGES IN EQUITY Cont’d FOR THE YEAR ENDED 31 DECEMBER 2018

67 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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68 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENTS OF CASH FLOWS Cont’d FOR THE YEAR ENDED 31 DECEMBER 2018 *URXS &RPSDQ\     50  50  50  50 

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107 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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109 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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113 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

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114 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

16. Investment in subsidiaries Company 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000

Unquoted ordinary shares, in Malaysia, at cost 460,192 460,192 460,192 Unquoted redeemable preference shares, in Malaysia 95,000 95,000 95,000 555,192 555,192 555,192 Less: Impairment losses (46,596) (46,596) (46,596) 508,596 508,596 508,596

Details of the subsidiaries are as follows:

Country of Principal Proportion of Name of subsidiariesincorporation activities ownership interest 2018 2017 %%

Bayou Bay Development Malaysia Property 100 100 Sdn. Bhd. development

Tebrau Bay Sdn. Bhd.Malaysia Property 100 100 development and construction

Tebrau Bay ConstructionsMalaysia Construction 100 100 Sdn. Bhd. of infrastructure and buildings

Southern Crest DevelopmentMalaysia Investment 100 100 Sdn. Bhd. holding

Success Straits Sdn. Bhd.Malaysia Property 100 100 development

Trillion Greencity Sdn. Bhd.Malaysia Dormant 100 100

Held by Bayou Bay Development Sdn. Bhd.: Bayou ManagementMalaysia Property 100 100 Sdn. Bhd. holding and development

The subsidiaries companies have the same reporting period as the Group.

115 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

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116 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

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117 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

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118 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 20. Trade and other receivables (cont'd) Company Note 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000

Non-current assets Other receivables Amount due from subsidiaries 78,652 78,652 -

Current assets Other receivables Amount due from subsidiaries (e) 183,874 186,356 162,726 Amount due from related companies (b) 149 29 - Deposits 24 17 20 Sundry receivables 130 109 65 Total trade and other receivables (current) 184,177 186,511 162,811 Add: Cash and bank balances (Note 23) 1,798 1,566 2,004 Financial assets carried at amortised cost 264,627 266,729 164,815

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 60 day (31.12.2017: 30 to 60 day; 1.1.2017: 30 to 60 day) 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 is as follows: Group 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000

Neither past due nor impaired 276,919 280,196 87,272 1 to 30 days past due not impaired 2 52 1,078 31 to 60 days past due not impaired - 99 359 61 to 90 days past due not impaired - 79 87 91 to 120 days past due not impaired 3,200 2,080 642 More than 121 days past due not impaired 19,562 18,238 45,757 22,764 20,548 47,923 Impaired 2,938 2,938 2,938 302,621 303,683 138,133

Trade receivables that are neither past due nor impaired

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year, other than amount due from associate, Greenland Tebrau Sdn. Bhd. ("GTSB"), arising from the land sale during the previous financial year for which the Group provided extended credit terms.

119 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 20. Trade and other receivables (cont'd)

(a) Trade receivables (cont'd)

Trade receivables that are past due but not impaired

Included in trade receivables is an amount of RM90,024,000 (31.12.2017: RM87,868,000; 1.1.2017: RM85,046,000), which arose from a compulsory acquisition by theState Government of Johor Darul Ta'zim ("SGJ"), which the Group regards as creditworthy. The receivable will be mainly settled by transfers of land of equivalent value from SGJ.

The Group has trade receivables amounting to approximately RM22,764,000 (31.12.2017: RM20,548,000; 1.1.2017 : RM47,923,000) that are past due at the reporting date but not impaired.

These receivables are due from customers which the Group regards as creditworthy but have a track record of slow payment. These amounts are unsecured.

Receivables that are impaired

The Group'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 Individually impaired 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000

Trade receivables - nominal amounts 2,938 2,938 2,938 Less : Allowance for impairment (2,938) (2,938) (2,938) - - -

There was no movement in the allowance accounts during the financial year.

(b) Amounts due from related companies and holding company

The amounts due from related companies and holding companies, which mainly arose from advances, are unsecured, non-interest bearing and repayable on demand.

(c) Deposit paid for purchases of land

The deposits paid for purchases of land are further analysed as follows:

Group 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000 Purchase of land from Bahagia Wangsa Sdn. Bhd. ("BWSB") - - 23,594 Purchase of land from Malgold Construction Sdn. Bhd. ("MCSB") - - 3,900 - - 27,494 74 120 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 20. Trade and other receivables (cont'd)

(c) Deposit paid for purchases of land (cont'd)

The acquisitions of land from BWSB and MCSB were completed during the prior financial year upon settlement of the balance consideration by way of cash payment and issuance of ordinary shares.

(d) Sundry receivables

Other receivables that are impaired

The Group's other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group Individually impaired 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000

Other receivables - nominal amounts 13,365 13,365 13,365 Less : Allowance for impairment (13,365) (13,365) (13,365) - - -

There was no movement in the allowance accounts during the financial year.

(e) Amount due from subsidiaries

The amount due from subsidiaries, which mainly arose from expenses paid on behalf and loans granted to finance acquisition and reclamation of land, are unsecured, non-interest bearing and are repayable on demand, except for an amount of RM98,000,000 (31.12.2017: RM98,000,000; 1.1.2017: RM98,000,000) which bears interest of 1.75% + cost of funds (31.12.2017: 1.75% + cost of funds; 1.1.2017: 1.75% + cost of funds) per annum.

21. Contract assets Group 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000 Restated Restated Gross amount due from customers for contract work (Note 22) 17,703 25,538 33,699 Accrued billings in respect of property development cost 87,345 25,378 2,242 Costs to obtain the contracts 15,335 1,677 4,308 120,383 52,593 40,249

121 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 21. Contract assets (cont'd)

Costs to obtain the contract mainly relate to sales commissions incurred to secure sale of property units and are recognised in profit or loss over time based on the input method.

The transaction price allocated to the unsatisfied performance obligations as at 31 December 2018 is RM2,424,240,000. The remaining performance obligations are expected to be recognised as follows: 31.12.2018 RM'000

Within 1 year 157,208 Between 1 and 4 years 2,267,032 2,424,240

22. Gross amount due from/(to) customers for contract work-in-progress

Group 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000

Construction contract costs incurred to date 1,097,091 1,078,856 1,061,276 Attributable profits 83,415 85,414 81,047 Less: Provision for foreseeable losses (19,837) (10,994) (4,002) 1,160,669 1,153,276 1,138,321 Less: Progress billings (1,150,843) (1,142,643) (1,118,232) 9,826 10,633 20,089 Presented as: Gross amount due from customers for contract work (Note 21) 17,703 25,538 33,699 Gross amount due to customers for contract work (Note 27) (7,877) (14,905) (13,610) 9,826 10,633 20,089 Retention sums on construction contracts, included in trade receivables 1,002 1,718 1,180

23. Cash and bank balances Group 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000

Cash on hand and at banks 2,764 3,061 3,503 Restricted cash balances 1,508 3,099 1,977 Short term deposits with licensed banks 37,413 41,996 44,018 41,685 48,156 49,498

122 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

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123 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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124 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

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125 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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126 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

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127 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

26. Trade and other payables Group Note 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000 Restated Restated Current Trade payables Third parties (a) 120,908 97,856 103,295 Amount due to related companies (a) 31,869 35,866 21,272 152,777 133,722 124,567 Other payables Amount due to a shareholder (b) 1,823 1,823 1,823 Amount due to related companies (c) 247,450 138,749 57,310 Deposit received (d) 211,625 211,572 237,308 Deferred revenue - 2,619 - Sundry payables and accruals 61,365 77,401 39,022 522,263 432,164 335,463

Total trade and other payables 675,040 565,886 460,030 Add : Loans and borrowings (Note 24) 241,081 238,843 142,387 Total financial liabilities carried at amortised cost 916,121 804,729 602,417

Company Note 31.12.2018 31.12.2017 1.1.2017 RM'000 RM'000 RM'000 Current Other payables Amount due to a shareholder (b) 1,823 1,823 1,823 Amount due to related companies 611 623 602 Sundry payables and accruals 1,141 1,620 1,273 Total trade and other payables 3,575 4,066 3,698 Add : Loans and borrowings (Note 24) 100,000 100,000 100,000 Total financial liabilities carried at amortised cost 103,575 104,066 103,698

(a) Trade payables

These amounts are non-interest bearing. Trade payables are normally settled on 30 to 90 day (31.1.2017: 30 to 90 day; 1.1.2017: 30 to 90 day) terms.

(b) Amounts due to a shareholder

The amounts due to a shareholder, which mainly arose from expenses paid on behalf, are unsecured, non-interest bearing and are repayable on demand.

128 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

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129 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

28. Provisions Project Other costs provisions Total RM'000 RM'000 RM'000

At 1 January 2017 3,643 - 3,643 Addition during the year (Note 8) (restated) - 1,281 1,281 At 31 December 2017 (restated) and 1 January 2018 3,643 1,281 4,924 Addition during the year (Note 8) - 1,421 1,421 At 31 December 2018 3,643 2,702 6,345

29. Share capital Number of ordinary shares Amount 2018 2017 2018 2017 '000 '000 RM'000 RM'000 Issued and fully paid: As at 1 January 837,389 736,700 726,946 368,350 Reclassified from share premium (Note 30) - - - 251,775 Issued during the year - 87,000 - 78,300 Exercise of employee share options - 13,689 - 28,521 As at 31 December 837,389 837,389 726,946 726,946

During the previous financial year, the Company increased its issued and paid-up ordinary share capital from RM368,349,929 to RM726,946,349 by way of:

(i) issuance of 87,000,000 ordinary shares at an issue price of RM0.90 per ordinary share for acquisitions of land; and

(ii) issuance of 13,689,000 ordinary shares for cash pursuant to the Company’s Employee Share Option Scheme at an exercise price of RM1.50 per ordinary share, as disclosed in Note 31.

The new ordinary shares issued during the previous financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

130 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

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131 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

132 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

32. Deferred taxation Group 2018 2017 RM'000 RM'000 Restated

At 1 January 84,625 88,069 Recognised in profit or loss (Note 11) (2,520) (3,444) At 31 December 82,105 84,625

Presented after appropriate offsetting as follows : Deferred tax assets (16,090) (12,233) Deferred tax liabilities 98,195 96,858 82,105 84,625

The components and movements of deferred tax liabilities/(assets) of the Group during the financial year are as follows:

Deferred tax liabilities of the Group

Property, Land and Other plant and development temporary equipment expenditure differences Total RM'000 RM'000 RM'000 RM'000

At 1 January 2018 (3) 96,858 (110) 96,745 Recognised in profit or loss - (145) - (145) At 31 December 2018 (3) 96,713 (110) 96,600

At 1 January 2017 (restated) 47 99,307 100 99,454 Recognised in profit or loss (50) (2,449) (210) (2,709) At 31 December 2017 (3) 96,858 (110) 96,745

133 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 32. Deferred taxation (cont'd)

Deferred tax assets of the Group Property, Other plant and temporary equipment Provisions differences Total RM'000 RM'000 RM'000 RM'000

At 1 January 2018 - (10,370) (1,750) (12,120) Recognised in profit or loss - (2,375) - (2,375) At 31 December 2018 - (12,745) (1,750) (14,495)

At 1 January 2017 (restated) - (9,635) (1,750) (11,385) Recognised in profit or loss - (735) - (735) At 31 December 2017 - (10,370) (1,750) (12,120)

33. Related party disclosures

In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year:

Group Company 2018 2017 2018 2017 RM'000 RM'000 RM'000 RM'000

Subsidiary Loan interest charged - - 5,714 5,263

Related company Loan interest payable 12,198 - - - Rental receivable 78 95 - - Rental payable 8 - - - Construction costs paid and payable 15,629 51,041 - -

Directors' related company Purchase of raw materials 525 57 - - Rental payable 37 - - - Sales of motor vehicle 160 - - - Landscaping works paid and payable 110 34 - - Construction costs paid and payable 54,137 72,046 - -

88 134 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

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141 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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142 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS Cont’d FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

143 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

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144 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

LIST OF PROPERTIES AS AT 31 DECEMBER 2018

Land Net Book Date of Location Location Area Value Acquisition/ No (Lot No) (Title No) Tenure (ha) Usage (RM) Revaluation 1 PTD 181552 HS(D) 376617 Leasehold 0.370 Building 2 Lot 182455 PN 39962 (Expiring 21 4.908 Building 3 Lot 182487 PN 39961 January 2097) 6.647 Building 4 PTD 194780 HS(D) 437858 1.020 Building 5 Lot 156551 PN 58276 0.470 Agriculture 6 Lot 156556 PN 58277 0.567 Agriculture 7 Lot 156561 PN 58278 4.081 Agriculture 8 Lot 156562 PN 58279 0.684 Agriculture 9 Lot 156575 PN 57445 Leasehold 4.044 Agriculture 10 PTD 194787 HS(D) 437865 (Expiring 27 1.862 Agriculture 11 PTD 194788 HS(D) 437866 December 2105) 2.998 Agriculture 12 PTD 194790 HS(D) 437868 3.240 Agriculture 13 PTD 194798 HS(D) 437847 16.645 Agriculture 591,708,783.25 16 April 2003 14 PTD 194800 HS(D) 437849 10.591 Agriculture 15 PTD 194801 HS(D) 437850 67.964 Agriculture 16 PTD 194802 HS(D) 437851 10.864 Agriculture JV Paradise Realty Leasehold 17 PTD 194776 HS(D) 437854 (Expiring 27 December 2105) 18 PTD 194792 HS(D) 554622 13.149 Agriculture 19 PTD 194794 HS(D) 554624 53.726 Agriculture 20 PTD 194795 HS(D) 554625 Freehold 34.242 Agriculture 21 PTD 194796 HS(D) 554626 4.690 Agriculture 22 PTD 194797 HS(D) 554627 49.020 Agriculture 23 LOT 150030 PN 52643 Rehabilitation 3.320 Building 24 PTD 166483 HS(D) 351597 3.683 Building 25 PTD 166479 HS(D) 351593 7.122 Agriculture 26 PTD 166480 HS(D) 351594 11.036 Agriculture 27 Lot 150029 PN 52642 4.403 Agriculture 28 Lot 150032 PN 52644 1.988 Agriculture 29 PTD 166487 HS(D) 351599 1.741 Agriculture HS (D) 30 PTD 166488 1.187 Agriculture 351600 Leasehold 31 Lot 150037 PN 52597 (Expiring 21 4.280 Agriculture 32 Lot 150039 PN 52598 January 2097) 1.158 Agriculture 33 PTD 173048 HS(D) 353200 0.552 Building 217,125,377.25 16 April 2003 34 PTD 181976 HS(D) 375498 0.632 Building 35 PTD 181977 HS(D) 375499 0.826 Building 36 PTD 181985 HS(D) 375504 0.526 Building 37 PTD 181986 HS(D) 375505 0.555 Building 38 PTD 196260 HS(D) 442852 0.809 Building 39 PTD 196262 HS(D) 442854 0.620 Building 40 PTD 163089 HS(D) 320480 Joint Venture with 41 PTD 163090 HS(D) 320481 Paradise Realty 42 PTD 163091 HS(D) 320482 Leasehold (Expiring 21 43 PTD 163092 HS(D) 320483 January 2097)

145 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

LIST OF PROPERTIES AS AT 31 DECEMBER 2018 Cont’d

Land Net Book Date of Location Location Area Value Acquisition/ No (Lot No) (Title No) Tenure (ha) Usage (RM) Revaluation 44 PTD 163093 HS(D) 320484 45 PTD 163094 HS(D) 320485 46 PTD 163095 HS(D) 320486 47 PTD 163096 HS(D) 320487 48 PTD 163097 HS(D) 320488 49 PTD 163098 HS(D) 320489 50 PTD 163099 HS(D) 320490 51 PTD 163100 HS(D) 320491 52 PTD 163101 HS(D) 320492 53 PTD 163102 HS(D) 320493 54 PTD 163103 HS(D) 320494 55 PTD 163104 HS(D) 320495 56 PTD 163105 HS(D) 320496 57 PTD 163106 HS(D) 320497 58 PTD 163107 HS(D) 320498 59 PTD 163108 HS(D) 320499 60 PTD 163109 HS(D) 320500 61 PTD 163110 HS(D) 320501 Joint Venture with 62 PTD 163111 HS(D) 320502 Paradise Realty 63 PTD 163112 HS(D) 320503 Leasehold 217,125,377.25 16 April 2003 64 PTD 163113 HS(D) 320504 (Expiring 21 65 PTD 163114 HS(D) 320505 January 2097) 66 PTD 163115 HS(D) 320506 67 PTD 163116 HS(D) 320507 68 PTD 163117 HS(D) 320508 69 PTD 163118 HS(D) 320509 70 PTD 163119 HS(D) 320510 71 PTD 163120 HS(D) 320511 72 PTD 163121 HS(D) 320512 73 PTD 163122 HS(D) 320513 74 PTD 163123 HS(D) 320514 75 PTD 163124 HS(D) 320515 76 PTD 163125 HS(D) 320516 77 PTD 163126 HS(D) 320517 78 PTD 163127 HS(D) 320518 79 PTD 163128 HS(D) 320519 80 PTD 163129 HS(D) 320520 81 PTD 163130 HS(D) 320521 82 PTD 163131 HS(D) 320522 19.77 83 PTD 222169 HS(D) 554724 Freehold Building 118,702,335.75 27 July 2015 ha Residential Leasehold and 31 March 84 PTD 196261 HS(D) 442853 (Expiring 21 0.37 ha 1,687,772.36 Commercial 2013 January 2097) Development Unit 222, Bandar 6,006 Bungalow 31 December 85 Putra, Phase Freehold 460,000.00 sq. ft. Lot 2015 114, Bangi, Selangor 146 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

LIST OF PROPERTIES AS AT 31 DECEMBER 2018

Land Net Book Date of Location Location Area Value Acquisition/ No (Lot No) (Title No) Tenure (ha) Usage (RM) Revaluation Unit No. 3, Type No. 3G, 15th Floor, Leasehold Building A, (Expirin PD Marina 1,122 sq. 31 December 86 Leasehold Condominium 88,000.00 International ft. 2015 Resort, Port (Expiring 17 Dickson, December 2101) Negeri Sembilan 87 Lot 733 Geran 90585 Freehold 3.89 ha Agriculture 93,381,618.67 3 March 2017 88 Lot 726 Geran 90571 89 Lot 2476 Geran 81455 90 Lot 2680 Geran 101213 Freehold 27.34 ha Agriculture 239,054,356.89 20 April 2017 91 Lot 2734 Geran 82840

147 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

ANALYSIS OF SHAREHOLDINGS AS AT 29 MARCH 2019

Issued & Fully Paid Up Capital : RM493,972,514.10 Class of Shares : Ordinary Shares Voting Right : One (1) vote per ordinary share

A. DISTRIBUTION OF SHAREHOLDINGS

Holdings No. of Holders Total Holdings % Less than 99 63 957 0.00 100 to 1,000 3,603 3,367,983 0.40 1,001 to 10,000 8,584 42,603,772 5.09 10,001 to 100,000 3,445 113,313,213 13.53 100,001 to less than 10% of issued shares 532 308,661,596 36.86 10% and above of issued shares 3 369,441,336 44.12 Total 16,230 837,388,857 100.00

B. LIST OF 30 LARGEST SHAREHOLDERS

No. Name No of shares held % 1. ISKANDAR WATERFRONT HOLDINGS SDN BHD 209,126,000 24.973 2. AMSEC NOMINEES (TEMPATAN) SDN BHD 106,720,069 12.744 PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR ISKANDAR WATERFRONT HOLDINGS SDN.BHD.(A/C 2) 3. KUMPULAN PRASARANA RAKYAT JOHOR SDN BHD 53,595,267 6.400 4. EIGHT DANGA SDN BHD 13,500,000 1.612 5. KENANGA NOMINEES (TEMPATAN) SDN BHD 13,477,000 1.609 PLEDGED SECURITIES ACCOUNT FOR TA KIN YAN 6. RHB NOMINEES (TEMPATAN) SDN BHD 10,500,000 1.253 EIGHT DANGA SDN BHD 7. CIMSEC NOMINEES (TEMPATAN) SDN BHD 9,500,000 1.134 CIMB BANK FOR NG CHIEW ENG @ NG CHIEW MING (MY3087) 8. LIM SOON HUAT 7,500,000 0.895 9. MAYBANK NOMINEES (TEMPATAN) SDN BHD 6,368,100 0.760 PLEDGED SECURITIES ACCOUNT FOR TNTT REALTY SDN BHD 10. KENANGA NOMINEES (TEMPATAN) SDN BHD 5,825,300 0.695 PLEDGED SECURITIES ACCOUNT FOR MERRY NOEL ROBERT 11. CITIGROUP NOMINEES (ASING) SDN BHD 5,823,400 0.695 CBNY FOR EMERGING MARKET CORE EQUITY PORTFOLIO DFA INVESTMENT DIMENSIONS GROUP INC 12. PEMBINAAN HAMID ABD. RAHMAN SDN. BHD. 5,170,000 0.617 13. AMSEC NOMINEES (TEMPATAN) SDN BHD 5,000,000 0.597 PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR KALIMULLAH BIN MASHEERUL HASSAN (SMART) 14. HSBC NOMINEES (ASING) SDN BHD 5,000,000 0.597 EXEMPT AN FOR BANK JULIUS BAER & CO. LTD. (SINGAPORE BCH) 15. UOB KAY HIAN NOMINEES (ASING) SDN BHD 4,108,500 0.490 EXEMPT AN FOR UOB KAY HIAN PTE LTD ( A/C CLIENTS) 16. CITIGROUP NOMINEES (ASING) SDN BHD 3,662,100 0.437 CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND 17. MAYBANK NOMINEES (ASING) SDN BHD 3,491,800 0.416 PLEDGED SECURITIES ACCOUNT FOR SAN TUAN SAM

148 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

ANALYSIS OF SHAREHOLDINGS AS AT 29 MARCH 2019 Cont’d

B. LIST OF 30 LARGEST SHAREHOLDERS Cont’d

No. Name No of shares held % 18. KENANGA NOMINEES (TEMPATAN) SDN BHD 2,690,800 0.321 PLEDGED SECURITIES ACCOUNT FOR FRANCIS CHAI KIM LUNG 19. AMSEC NOMINEES (TEMPATAN) SDN BHD 2,639,000 0.315 PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR LEE HUN YEUNG (IWCITY) 20. ICON SEJATI SDN. BHD. 2,604,000 0.310 21. KENANGA NOMINEES (TEMPATAN) SDN BHD 2,500,000 0.298 PLEDGED SECURITIES ACCOUNT FOR KOTA JAYASAMA SDN BHD (3RD PARTY EDSP) 22. AMSEC NOMINEES (TEMPATAN) SDN BHD 2,427,900 0.289 PLEDGED SECURITIES ACCOUNT FOR TAN LEAK GOH 23. H'NG BAK TEE 2,400,000 0.286 24. WONG SIEW CHIN 2,326,400 0.277 25. RHB NOMINEES (TEMPATAN) SDN BHD 2,127,200 0.254 PLEDGED SECURITIES ACCOUNT FOR NGAI SOK FONG 26. TAN WEN SHIOW 2,045,900 0.244 27. RHB NOMINEES (TEMPATAN) SDN BHD 1,995,000 0.238 OSK CAPITAL SDN BHD FOR KOTA JAYASAMA SDN. BHD. 28. CITIGROUP NOMINEES (ASING) SDN BHD 1,986,496 0.237 CBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES 29. KENANGA NOMINEES (TEMPATAN) SDN BHD 1,958,200 0.233 PLEDGED SECURITIES ACCOUNT FOR YAP KOK WOON 30. RHB NOMINEES (TEMPATAN) SDN BHD 1,955,000 0.233 PLEDGED SECURITIES ACCOUNT FOR GARY LEE SEATON TOTAL 498,023,432 59.473

C. LIST OF SUBSTANTIAL SHAREHOLDERS

Name Direct Interest Deemed Interest No. of shares % No. of shares % ISKANDAR WATERFRONT 209,126,000 24.974 -- HOLDINGS SDN BHD (“IWH”) AMSEC NOMINEES (TEMPATAN) SDN BHD 106,720,069 12.744 -- PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR ISKANDAR WATERFRONT HOLDINGS SDN.BHD.(A/C 2) KUMPULAN PRASARANA 53,595,267 6.400 315,846,069(a) 37.717 RAKYAT JOHOR SDN BHD CREDENCE RESOURCES SDN BHD (“CR”) -- 315,846,069(a) 37.717 TAN SRI DATO’ LIM KANG HOO -- 315,846,069(b) 37.717 TOTAL 369,441,336 44.118 315,846,069 37.717

(a) Deemed interested in the shares held by IWH by virtue of its interest in IWH pursuant to Section 8 of the Companies Act 2016. (b) Deemed interested in the shares held by IWH by virtue of his interest in IWH through CR pursuant to Section 8 of the Companies Act 2016.

149 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

STATEMENT OF DIRECTORS’ INTEREST AS AT 29 MARCH 2019

LIST OF DIRECTORS’ SHAREHOLDINGS IN THE COMPANY

Name Direct Interest Deemed Interest No. of shares % No. of shares % Tan Sri Dato’ Lim Kang Hoo -- 315,846,069(a) 37.72 Datuk Lim Keng Guan -- 776,000(b) 0.09 Wong Khai Shiuan 10,000 0.001 - -

(a) Deemed interested in the shares held by Iskandar Waterfront Holdings Sdn. Bhd. (“IWH”) by virtue of his interest in IWH. (b) Deemed interested in the shares held by Lim Seong Hai Holdings Sdn Bhd (“LSHH”) by virtue of his interest in LSHH.

150 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

OTHER DISCLOSURES

During the fi nancial year under review,

Utilisation of Proceeds There were no proceeds raised by the Company from any corporate exercise.

Material Contracts Save as disclosed in Note 33 to the fi nancial statements, there were no material contracts of the Company and its subsidiaries involving directors’ and major shareholders’ interest, either still subsisting at the end of the fi nancial year ended 31 December 2018 or entered into since the end of the previous fi nancial year.

Contracts Relating to Loan There were no contracts relating to a loan by the Company and its subsidiaries in respect of the preceding item.

Related Party Transactions Save as disclosed in Note 33 to the fi nancial statements, there were no related party transactions entered into by a subsidiary company of the Company which involve Directors’ and major shareholders’ interest, either still subsisting at the end of the fi nancial year ended 31 December 2018 or entered into since the end of the previous fi nancial year.

Options, Warrants or Convertible Securities There were no options, warrants or convertible securities issued by the Company being exercised.

Non-Audit Fees The amount of non-audit fees incurred for services rendered to the Group and the Company by the External Auditors was RM20,000 and RM8,000 respectively.

151 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 50th Annual General Meeting of ISKANDAR WATERFRONT CITY BERHAD (Co. No. 8256-A) will be held at DoubleTree Hilton Hotel Johor Bahru, 12, Jalan Ngee Heng, 80000 Johor Bahru, Johor on Thursday, 20 June 2019 at 10.00 a.m. for the following purposes:-

AGENDA

Ordinary Business

1. To receive the Audited Financial Statements for the year ended 31 December [Please refer to 2018 together with the Reports of the Directors and Auditors thereon. Explanatory Note 9(i)]

2. To re-elect the following Directors retiring in accordance with the Company’s Articles of Association:

(i) Datuk Lim Keng Guan - Article 78; (Resolution 1) (ii) En. Mohd Salleh bin Othman - Article 78; (Resolution 2) (iii) Mr. Lim Foo Seng - Article 78; (Resolution 3) (iv) Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman - Article 84 (Resolution 4)

3. To approve the payment of Directors’ fees, allowances and any other benefi ts (Resolution 5) payable not exceeding RM800,000 for the fi nancial year ending 31 December 2019. (Resolution 6) 4. To re-appoint Messrs. Ernst & Young as Auditors of the Company for the fi nancial year ending 31 December 2019 and to authorise the Directors to fi x their remuneration.

Special Business

To consider and, if thought fi t, to pass with or without any modifi cation(s), the following Ordinary and Special Resolutions:- (Resolution 7) 5. ORDINARY RESOLUTION - AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT 2016

“That pursuant to Sections 75 and 76 of the Companies Act 2016 and subject to approval of the relevant regulatory bodies, the Directors be and are hereby authorised to issue and allot shares in the Company at any time at such price and upon such terms and conditions and for such purposes and to such person or persons whomsoever as the Directors may, in their absolute discretion, deem fi t provided that the aggregate number of shares so issued does not exceed 10% of the issued capital of the Company for the time being and the Directors be and are also empowered to obtain the approval of the Bursa Malaysia for listing of and quotation for the additional shares so issued and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

152 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

NOTICE OF ANNUAL GENERAL MEETING Cont’d

6. ORDINARY RESOLUTION (Resolution 8) - PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WITH THE RELATED PARTIES AS DISCLOSED UNDER PARAGRAPH 33 (1 TO 3) OF THE CIRCULAR TO SHAREHOLDERS

“THAT approval be and is hereby given pursuant to Paragraph 10.09 and Practice Note 12 of the Bursa Malaysia Main Market Listing Requirements for the Company and its subsidiaries to enter into the category of Recurrent Related Party Transactions of a revenue or trading nature as set out in Paragraph 3.3 of the Circular to Shareholders dated 30 April 2019 with those Related Parties as set out in paragraph 3.2 which are necessary for their day-to-day operations, in the ordinary course of business made on an arm’s length basis and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders; AND THAT the authority conferred by this Mandate shall commence immediately upon the passing of this Resolution and is subject to annual renewal. In this respect, the authority shall continue to be in force until:

i. the conclusion of the next Annual General Meeting of the Company at which time the authority shall lapse unless the Authority is renewed by a Resolution passed at that Annual General Meeting;

ii. the expiration of the period within which the next Annual General Meeting after that date, is required to be held pursuant to section 340 of the Companies Act, 2016 (but shall not extend to such extension as may be allowed pursuant to section 340 of the Companies Act, 2016; or

iii. revoked or varied by resolution passed by the shareholders in general meeting;

whichever is the earlier;

FURTHER THAT the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things including executing such documents as may be required to give eff ect to the transactions contemplated and/or authorised by this Ordinary Resolution”.

7. ORDINARY RESOLUTION - CONTINUING IN OFFICE AS INDEPENDENT DIRECTORS

“That approval be and are hereby given to the following Directors who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years to continue to act as Independent Non-Executive Directors of the Company:

(i) Mr. Khoo Boon Ho (Resolution 9) (ii) Mr. Bernard Hilary Lawrence” (Resolution 10)

153 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTICE OF ANNUAL GENERAL MEETING Cont’d

8. SPECIAL RESOLUTION (Resolution 11) - PROPOSED ALTERATION OF THE EXISTING MEMORANDUM AND ARTICLES OF ASSOCIATION BY REPLACING WITH A NEW CONSTITUTION (“PROPOSED ALTERATION”)

THAT the existing Memorandum and Articles of Association of the Company be hereby altered by replacing with a new Constitution enclosed herewith as Annexure A with eff ect from the date of passing this special resolution.

THAT the Directors of the Company be hereby authorised to do all such acts and things and to take all such steps as they deem fi t, necessary, expedient and/or appropriate in order to complete and give full eff ect to the Proposed Alteration with full powers to assent to any condition, modifi cation, variation and/or amendment as may be required or imposed by the relevant authorities.

9. To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 2016. BY ORDER OF THE BOARD YONG MAY LI (F) LIM AIK YONG (F) WONG CHEE YIN (F) Secretaries JOHOR BAHRU 30 April 2019

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifi es the proportion of his holdings to be represented by each proxy.

3. Where a member is an authorized nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple benefi cial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

5. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an offi cer or attorney duly authorised.

6. The Proxy Form must be deposited with the Company Secretary at the Registered Offi ce, Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim, not less than 48 hours before the time set for the Meeting.

7. For the purpose of determining a member who shall be entitled to attend the 50th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 54(2) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a general meeting Record of Depositor as at 11 June 2019. Only a depositor whose name appears therein shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote on his stead.

154 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

NOTICE OF ANNUAL GENERAL MEETING Cont’d

Notes: Cont’d

8. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this Notice shall be put to vote by way of poll.

9. Explanatory Notes:

Agenda 1 This Agenda item is meant for discussion only as the provision of Section 340(1)(a) of the Companies Act, 2016 and the Company’s Articles of Association do not require a formal approval of the Shareholders and hence, is not put forward for voting.

Resolution 1 to 4: Article 78 of the Company’s Articles of Association expressly states that at the Annual General Meeting (“AGM”) in every subsequent year, one-third of the Directors for the time being or, if their number is not three or a multiple of three, then, the number nearest to one-third shall retire from offi ce and be eligible for re-election. Whereas Article 84 provides that any Director so appointed either to fi ll a casual vacancy or as an addition to the existing Directors shall hold offi ce only until the next AGM and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by rotation at that meeting.

Pursuant to Article 78, Datuk Lim Keng Guan, En. Mohd Salleh bin Othman and Mr. Lim Foo Seng are standing for re-election at this AGM. Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman is standing for re-election pursuant to Article 84 at this AGM.

The profi les of the Directors standing for re-election are provided on pages 14 to 18 of the Board of Directors’ Profi le in the 2018 Annual Report.

The Nomination Committee (NC) of the Company has assessed the criteria and contribution of Datuk Lim Keng Guan, En. Mohd Salleh bin Othman, Mr. Lim Foo Seng and Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman and recommended for their re-election. The Board endorsed the NC’s recommendation that Datuk Lim Keng Guan, En. Mohd Salleh bin Othman, Mr. Lim Foo Seng and Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman be re-elected as Directors of the Company.

Resolution 5: Section 230(1) of the CA 2016 provides amongst others, that the fees of the directors, and any benefi ts payable to the directors of a listed company and its subsidiaries shall be approved at a general meeting.

In this respect, the Board wishes to seek shareholders’ approval for the following payment of Directors’ fees, allowances and any other benefi ts payable not exceeding RM800,000 for the fi nancial year ending 31 December 2019.

In determining the estimated total amount of Directors’ Fees and Benefi ts payable for the Directors of the Company, the Board has considered various factors including the number of scheduled meetings for the Board, Board Committees, Board of Subsidiaries and Management Committees as well as the number of Directors involved in these meetings based on the current number of Directors and has included additional provisional sum for future appointment of Directors of the Company on the Boards of Subsidiaries and increase in number of Board and committee meetings due to business expansion.

Resolution 6: The Audit Committee and the Board have considered the re-appointment of Messrs. Ernst & Young as Auditors of the Company and collectively agreed that Ernst & Young has met the relevant criteria prescribed under Paragraph 15.21 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

155 ANNUAL REPORT 2018 Iskandar Waterfront City Berhad (8256-A)

NOTICE OF ANNUAL GENERAL MEETING Cont’d

Notes: Cont’d

9. Explanatory Notes: Cont’d

Resolution 7: Authority to Issue and Allot Shares pursuant to Sections 75 and 76 of the Companies Act 2016 The Ordinary Resolution No.7 proposed in Agenda 5 above, if passed, will empower the Directors of the Company from the date of the above meeting until the next AGM, unless earlier revoked or varied at a general meeting, to issue shares in the Company up to an aggregate number not exceeding ten per centum (10.0%) of the issued share capital of the Company for the time being for such purposes as they consider would be in the interest of the Company.

The renewal of the general mandate is to provide fl exibility to the Company to issue new securities without the need to convene separate general meeting to obtain its shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund-raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration.

The Company has not issue and allot any shares during the year under the mandate granted to the Directors at the last AGM of the Company held on 7 June 2018 and which will lapse at the conclusion of the 50th AGM of the Company.

Resolution 8: Proposed Mandate For Recurrent Related Party Transactions Of Revenue Or Trading Nature The Ordinary Resolution No. 8 proposed in Agenda 6 above if passed, will authorise the Company and each of its subsidiary companies to enter into recurrent related party transactions of a revenue or trading nature in their ordinary course of business. This authority, unless revoked or varied by the shareholders of the Company at a general meeting, will expire at the conclusion of the next AGM of the Company.

Resolution 9 and 10: Continuing in Offi ce as Independent Non-Executive Directors The Ordinary Resolution No. 9 and 10 as proposed in Agenda 7 if passed, will approve and authorise Mr. Khoo Boon Ho and Mr. Bernard Hilary Lawrence to continue to act as Independent Non-Executive Directors of the Company.

The Board has assessed the independence of Mr. Khoo Boon Ho and Mr. Bernard Hilary Lawrence who have served as Independent Non-Executive Directors of the Company for a cumulative term of nine (9) years and recommended them to continue to act as Independent Non-Executive Directors of the Company based on the following justifi cations:-

(a) their expertise in corporate, fi nance and legal matters which had signifi cant contribution to the eff ectiveness of the Board and the Committees; and

(b) they have exercised their due care during their tenure as Independent Non-Executive Directors of the Company and they have carried out their professional duties in the interest of the Company and the shareholders.

Resolution 11: Special Resolution on Proposed Alteration This proposed Special Resolution no.11 proposed in Agenda 8 if passed, will enable the Company to alter its existing Memorandum and Articles of Association by replacing with a new Constitution which is drafted in accordance with the relevant provisions of the Companies Act 2016, relevant amendments of Chapter 7 and other Chapters of the Main/ACE Market Listing Requirements of Bursa Malaysia Securities Berhad and other provisions of laws and regulations that are applicable to the Company.

For further information on the Proposed Alteration, please refer to the Annexure A enclosed together with this Notice of General Meeting of the Company dated 30 April 2019.

156 Iskandar Waterfront City Berhad (8256-A) ANNUAL REPORT 2018

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

1. There is no person seeking for election as Director of the Company at this Annual General Meeting except for the following Directors standing for re-election at the 50th Annual General Meeting of the Company as follows:

i. Datuk Lim Keng Guan (Executive Director);

ii. En. Mohd Salleh bin Othman (Independent Non-Executive Director);

iii. Mr. Lim Foo Seng (Independent Non-Executive Director); and

iv. Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman (Non-Independent Non-Executive Director).

The details of the Directors who are standing for re-election are set out in the Profi le of the Board of Directors in this Annual Report.

Information on securities holdings in the Company and its subsidiaries by the directors standing for re-election are set out in the Statement of Directors’ Interests in the Company and related corporation on page 49 of this Annual Report.

2. Attendance of Directors at Board Meetings held during the fi nancial year ended 31 December 2018

A total of fi ve (5) Board of Directors’ Meetings were held during the fi nancial year ended 31 December 2018, at the Company’s Meeting Room of Ground Floor, #G08, Block 8, Danga Bay, Jalan Skudai, 80200 Johor Bahru.

The details of attendance of Directors at the Board Meeting are disclosed in the Corporate Governance Overview Statement in this Annual Report.

3. Date, time and Place of the 50th Annual General Meeting

Date : Thursday, 20 June 2019

Time : 10.00 a.m.

Place : DoubleTree Hilton Hotel Johor Bahru, 12, Jalan Ngee Heng, 80000 Johor Bahru, Johor.

157 This Page Is Intentionally Left Blank FORM OF PROXY ISKANDAR WATERFRONT CITY BERHAD (Co. No. 8256-A) (Incorporated in Malaysia)

CDS ACCOUNT NO. NO. OF SHARES HELD

I/We………………………………………………………………....…....……….(I.C.No. ………………….…...…………….) of ...... (or attorney of the said ……………………………………………………...... ) a Member/ Members of ISKANDAR WATERFRONT CITY BERHAD (Co. No. 8256-A) hereby appoint:- Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address and / or (delete as appropriate)

Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address or failing him, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the 50th Annual General Meeting of the Company to be held at DoubleTree Hilton Hotel Johor Bahru, 12, Jalan Ngee Heng, 80000 Johor Bahru on Thursday, 20 June 2019 at 10.00 a.m. and at any adjournment thereof, and to vote as indicated below:-

NO. RESOLUTION FOR AGAINST Ordinary Business 1. Re-election of Director (Article 78) – Datuk Lim Keng Guan 2. Re-election of Director (Article 78) – En. Mohd Salleh bin Othman 3. Re-election of Director (Article 78) – Mr. Lim Foo Seng 4. Re-election of Director (Article 84) – Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman 5. To approve the payment of Directors’ fees, allowances and any other benefi ts payable for the fi nancial year ending 31 December 2019 6. Re-appointment of Ernst & Young as Auditors Special Business 7. Authority to Issue Shares Pursuant to Section 75 & 76 of the Companies Act 2016 8. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of Revenue or Trading Nature 9. Continuing in Offi ce as Independent Director, Mr. Khoo Boon Ho 10. Continuing in Offi ce as Independent Director, Mr. Bernard Hilary Lawrence 11. Proposed Alteration of the existing Memorandum and Articles of Association by replacing with a new Constitution (Please indicate with an “x” in the spaces provided how you wish your votes to be cast. If you do not do so, the Proxy will vote or abstain from voting at his discretion).

Signed this______day of ______2019 ______Signature of Member(s)/Common Seal Contact No.: Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company. 2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifi es the proportion of his holdings to be represented by each proxy. 3. Where a member is an authorized nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 4. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple benefi cial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 5. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an offi cer or attorney duly authorised. 6. The Proxy Form must be deposited with the Company Secretary at the Registered Offi ce, Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim, not less than 48 hours before the time set for the Meeting. 7. For the purpose of determining a member who shall be entitled to attend the 50th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 54(2) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a general meeting Record of Depositor as at 11 June 2019. Only a depositor whose name appears therein shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote on his stead. 8. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this Notice shall be put to vote by way of poll. Fold along this line (1)

Affix Stamp

THE COMPANY SECRETARY ISKANDAR WATERFRONT CITY BERHAD

Suite 1301, 13th Floor City Plaza, Jalan Tebrau 80300 Johor Bahru Johor Darul Takzim

Fold along this line (2)

CORPORATE GOVERNANCE REPORT

STOCK CODE : 1589 COMPANY NAME : ISKANDAR WATERFRONT CITY BERHAD FINANCIAL YEAR : December 31, 2018

OUTLINE:

SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

1

SECTION A – DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1 The board should set the company’s strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company’s values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

Application : Applied

Explanation on : The Board of the Company is responsible for the overall corporate application of the governance (“CG”) of the Group, including charting the strategic practice direction of the Company, safeguarding stakeholders’ interests and enhancing shareholder value. All directors owe fiduciary duties to the Group and must exercise reasonable care, skill and diligence to ensure the proper management of the entity, including maximizing long-term financial returns. The Board is responsible for ensuring that the Group are managed to achieve this result.

All Board members are expected to upholding the core values of integrity and enterprise with due regard to their fiduciary duties and responsibilities by assuming its principal responsibilities. To assist in the discharge its stewardship role, the Board has in place the Board Charter and has established Board Committees, namely the Audit Committee. Nomination Committee, Remuneration Committee, Risk Management Committee, Tender Award Committee and ESOS Committee to examine specific issues within their respective terms of reference.

All Board members are responsible to the Company for achieving a high level of good CG. The Board has delegated to the Executive Vice Chairman (“EVC”), the day-to-day management of the Group, supported by the Chief Executive Officer (“CEO”) and/or Executive Director and a team of experienced managers. EVC has overall responsibility for the operational and business units, organisational effectiveness, implementation of Board policies, directive, strategies and decision. He is responsible for the executive function of the Group’s business and leading the Management in implementing decisions and pursuing corporate objectives.

The roles and responsibilities of the Board are clearly defined in the Board Charter as follows: • reviewing and adopting a strategic plan for the Group; • overseeing the conduct of the Group’s business; • identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures;

2

• management succession planning; • overseeing the development and implementation of shareholder • communications policy for the Group; and • reviewing the adequacy and the integrity of the management information and internal controls system of the Group.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

3

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.2 A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

Application : Applied

Explanation on : The role of Chairman is to ensure that the Board is functioning application of the effectively and to undertake the following activities as highlighted in the practice Board Charter available on the Company’s website. The Chairman is primarily responsible for:

• conduct of Board meetings; • ensure that all relevant issues for the effective running of the Group’s business are on the agenda; • ensure that quality information to facilitate decision-making is delivered to Board members on a timely basis; • encourage all Directors to play an active role in Board activities; • chair general meetings of shareholders; and • liaise with EVC, CEO and the Company Secretary on the agenda for Board meetings.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

4

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.3 The positions of Chairman and CEO are held by different individuals.

Application : Applied

Explanation on : The Board Charter has outlined and included that the position of application of the Chairman, EVC and CEO are distinctly and separately held by different practice individuals, with a clear division of functions and responsibilities to ensure a balance of power and authority, such that no one individual has unfettered powers of decision making.

The Chairman of the Board is Dato’ Hj. Ayub bin Mion, an Independent Non-Executive Chairman, whereas Tan Sri Dato’ Lim Kang Hoo is acting as EVC, assisted by Mr Wong Khai Shiuan as the Executive Director cum CEO of the Company.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

5

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.4 The board is supported by a suitably qualified and competent Company Secretary to provide sound governance advice, ensure adherence to rules and procedures, and advocate adoption of corporate governance best practices.

Application : Applied

Explanation on : The Company Secretaries - Ms Yong May Li, Ms Lim Aik Yong and Ms application of the Wong Chee Yin are all qualified to act as Company Secretaries under practice Section 235(2) of the Companies Act 2016.

The Company Secretaries are the central source of information and advice to the Board and its Committees on the issues relating to compliance with laws, rules, procedures and regulations affecting the Company and Group. The Company Secretaries has attended various trainings during the year, in order to be kept updated on the laws, rules and regulations and also to maintain their competency to provide the necessary assistance to the Board.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timefram e :

6

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.5 Directors receive meeting materials, which are complete and accurate within a reasonable period prior to the meeting. Upon conclusion of the meeting, the minutes are circulated in a timely manner.

Application : Applied

Explanation on : The Board is supplied with relevant information and reports on application of the financial, operational, corporate, regulatory, business development and practice audit matters, by way of Board reports or upon specific requests, for decisions to be made on an informed basis and for and effective discharge of the Board’s responsibilities.

Timely dissemination of meeting agenda, including the relevant Board and Board Committee papers to all Directors prior to the Board and Board Committee meetings to give effect to Board decisions and to deal with matters arising from such meetings, is observed. The notice of the Board meeting is circulated to Board Members at least 7 days before the meeting and the Company has endeavoured to circulate the agenda and Board Papers at least 3 days before the meeting. Board members are furnished with pertinent explanation and information on relevant issues and recommendations by Management. The issues are then deliberated and discussed thoroughly by the Board before a decision is made.

In addition, Board members are updated on the Group’s activities and its operations on a regular basis. All Directors have access to information of the Company on a timely basis in an appropriate manner and quality necessary to enable them to discharge their duties and responsibilities.

Directors are provided with the contact details of key management personnel to facilitate direct and independent access to Management. Key management personnel will provide clarification or any additional material or information that is requested by Directors or that is necessary to enable the Board to make a balanced and informed assessment of the Group’s performance, position and prospects.

The deliberation and decision made during the Board and the Committees’ meetings are duly captured and recorded in the minutes and circulated to the Board in timely manner. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

7

Intended Outcome

There is demarcation of responsibilities between the board, board committees and management.

There is clarity in the authority of the board, its committees and individual directors.

Practice 2.1 The board has a board charter which is periodically reviewed and published on the company’s website. The board charter clearly identifies–
the respective roles and responsibilities of the board, board committees, individual directors and management; and
issues and decisions reserved for the board.

Application : Applied

Explanation on : The Board is aware of the need to clearly demarcate the duties and application of the responsibilities of the Board, Board Committees and Management, practice including the limits of authority accorded, in order to provide clarity and guidance to Directors and Management. The Board has in place a Board Charter, setting out, inter-alia, the roles of the Board, Board Committees, Executive and Non-Executive Directors and Management. The Charter serves as a reference point for Board activities to enable Directors to carry out their stewardship role and discharge their fiduciary duties towards the Company. The Board shall update the Charter as and when need arises to reflect changes to the Company’s policies, procedures as well as to comply with the latest regulations and legislations.

The full Charter is available on the Company’s website at www.iwcity.com.my. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

8

Intended Outcome

The board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness.

The board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company.

Practice 3.1 The board establishes a Code of Conduct and Ethics for the company, and together with management implements its policies and procedures, which include managing conflicts of interest, preventing the abuse of power, corruption, insider trading and money laundering.

The Code of Conduct and Ethics is published on the company’s website.

Application : Applied

Explanation on : The Board has formulated ethical standards through a code of conduct application of the for the Directors, senior management and all employees and will practice ensure its compliance. The Code of Conduct includes principles related to conflict of interest, dealings with confidential information, to ensure safety, security and adherence to Company’s rules, encourage the reporting of unlawful or unethical behaviour, dealing with suppliers, customers and third parties.

The Code of Conduct is available at the Company’s website at www.iwcity.com.my. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

9

Intended Outcome

The board is committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness.

The board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company.

Practice 3.2 The board establishes, reviews and together with management implements policies and procedures on whistleblowing.

Application : Applied

Explanation on : The Whistle Blowing Policy has been established and a procedures application of the document, which outlines when, how and to whom a concern may be practice properly raised about the actual or potential corporate fraud or breach of regulatory requirements involving employees, Management or Directors in the Group, is available on the Company’s website at www.iwcity.com.my.

For the financial year under review, the Board is unaware of any activities related to whistle blowing and no communication received from the whistleblowing process.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

10

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.1 At least half of the board comprises independent directors. For Large Companies, the board comprises a majority independent directors.

Application : Applied

Explanation on : The Board currently comprises nine (9) members, three (3) of whom application of the are Executive Directors, one (1) Non-Independent Non-Executive practice Director, and five (5) Independent Non-Executive Directors. We had also appointed one (1) Alternate Director.

The Board is made up by majority Independent Directors and has fulfils the requirements as set out under the Listing Requirements of Bursa Malaysia, which stipulates that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

11

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.2 The tenure of an independent director does not exceed a cumulative term limit of nine years. Upon completion of the nine years, an independent director may continue to serve on the board as a non- independent director.

If the board intends to retain an independent director beyond nine years, it should justify and seek annual shareholders’ approval. If the board continues to retain the independent director after the twelfth year, the board should seek annual shareholders’ approval through a two-tier voting process.

Application : Applied

Explanation on : Mr Khoo Boon Ho, the Senior Independent Non-Executive Director of application of the the Company has served the Board for more than 14 years. The practice Company has since year 2013, put forward the resolution at its Annual General Meeting, to seek approval from the shareholders for Mr Khoo to continue to serve as Independent Director of the Company.

Mr Bernard Hilary Lawrence, the Independent Non-Executive Director of the Company has served the Board for more than 9 years.

Notwithstanding their long tenure in office, the Board has assessed both Mr Khoo and Mr Bernard’s independence and is of the view that their independence have not been impaired or compromised. Additionally, the Board is of the view that the independence of Directors cannot be assessed only based on the length of service, but that the true independence emanates from intellectual honesty, manifested through a genuine commitment to serve the best interests of the Company. The Board has then proposed the continuation of Mr Khoo and Mr Bernard as Independent Directors given their expertise in corporate, legal and finance matters have furnished significant contribution to the effectiveness of the Board and the Board Committees as a whole.

The Board has resolved that Mr Khoo Boon Ho and Mr Bernard Hilary Lawrence, who have served in the Company cumulatively exceeded 9 years of services, to seek for shareholders’ approval for their continuation as Independent Non-Executive Directors of the Company at the forthcoming 50th Annual General Meeting. In addition, the Company will seek shareholders’ approval through a two-tier voting process, for Mr Khoo Boon Ho’s continuation as Independent Non- Executive Director.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

12

Measure :

Timefra me :

13

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.3 - Step Up The board has a policy which limits the tenure of its independent directors to nine years.

Application : Adopted

Explanation on : The policy which limits the tenure of its independent directors to nine adoption of the years is indicated in the Board Charter of the Company and is available practice on the Company’s website at www.iwcity.com.my.

14

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.4 Appointment of board and senior management are based on objective criteria, merit and with due regard for diversity in skills, experience, age, cultural background and gender.

Application : Applied

Explanation on : The Board recognises the importance of diversity, whether in terms of application of the age, gender, ethnicity or religion, skills, experience or cultural practice background. The Board has in place a Diversity Policy, setting out strategic intent for the Board diversity which is the attraction, retention and development of a diverse team of skilled people who are increasingly engaged towards the delivering of the Group’s strategy.

The Nomination Committee (“NC”), established by the Board is primarily responsible for recommending suitable appointments to the Board, taking into consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should bring to the Board. It is also tasked to assess the effectiveness of the Board as a whole, the Board Committees and the contribution of each Director.

The NC is responsible, by utilizing independent sources to identify suitably qualified candidates (based on objective criteria, merit and with due regard for diversity in skills, experience, age, cultural background and gender), and propose such candidates as Senior Management and to assess such senior management on an ongoing basis.

The role of NC is detailed in its Terms of Reference, which is available on the Company’s website at www.iwcity.com.my

There were no new appointments to the Senior Management during the financial year under review ， except for an appointment of Non- independent Non-Executive Director, Dato’ Hj. Mohd Noorazam bin Dato’ Hj. Osman.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

15

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.5 The board discloses in its annual report the company’s policies on gender diversity, its targets and measures to meet those targets. For Large Companies, the board must have at least 30% women directors.

Application : Departure

Explanation on : application of the practice

Explanation for : Presently, there is no female Director on the Board of the Company. departure

The Board is supportive to the gender diversity policy and mindful that female director is equally capable to add value to the Board. However, the Board considers that it is difficult to set meaningful measurable objectives for achieving gender diversity.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure : The Board is endeavouring to have a female board member in the future.

Timeframe : Others

16

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.6 In identifying candidates for appointment of directors, the board does not solely rely on recommendations from existing board members, management or major shareholders. The board utilises independent sources to identify suitably qualified candidates.

Application : Applied

Explanation on : It is the responsibility of the NC by utilizing independent sources to application of the identify suitably qualified candidates and propose such candidates as practice new nominees to the Board and to assess directors on an ongoing basis.

The identification of candidates for appointment of directors is guided by the Terms of Reference of the NC.

The Committee is satisfied with the current size of the Board and with the right mix of qualifications, skills and experience for the Board, therefore has not propose any change to the composition of the Board.

During the financial year ended 31 December 2018, there was a resignation of a Non-Independent Non-Executive Director and an appointment of a new Non-Independent Non-Executive Director. There is no change to the composition of the Board with these changes Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

17

Intended Outcome

Board decisions are made objectively in the best interests of the company taking into account diverse perspectives and insights.

Practice 4.7 The Nominating Committee is chaired by an Independent Director or the Senior Independent Director.

Application : Applied

Explanation on : The NC is chaired by Mr Bernard Hilary Lawrence, an Independent application of the Non-Executive Director, who leads the Committee, to perform its duties practice and responsibilities as specified in the Terms of Reference of the NC.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

18

Intended Outcome

Stakeholders are able to form an opinion on the overall effectiveness of the board and individual directors.

Practice 5.1 The board should undertake a formal and objective annual evaluation to determine the effectiveness of the board, its committees and each individual director. The board should disclose how the assessment was carried out and its outcome.

For Large Companies, the board engages independent experts periodically to facilitate objective and candid board evaluations.

Application : Applied

Explanation on : The NC is responsible to carry out the annual assessment of the application of the effectiveness of the Board as a whole as well as the committees of the practice Board. The annual assessment comprises of Board Assessment by Individual Directors in relation to their performance and contribution towards meeting the needs of the Company. The assessments include Self and Peer Assessment and an assessment of independence for an Independent Director. All assessments and evaluations carried out by the Committee in the discharge of all its functions has been properly documented.

In respect of the assessment for the financial year ended 31 December 2018, the Board was satisfied with the results that the Board and Board Committees have discharged their duties and responsibilities effectively and the contribution and performance of each individual Director is satisfactory. The Board was also satisfied that the Board composition in terms of size, the balance between Executive, Non-Executive and Independent Directors and mix of skills were adequate. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

19

Intended Outcome

The level and composition of remuneration of directors and senior management take into account the company’s desire to attract and retain the right talent in the board and senior management to drive the company’s long-term objectives.

Remuneration policies and decisions are made through a transparent and independent process.

Practice 6.1 The board has in place policies and procedures to determine the remuneration of directors and senior management, which takes into account the demands, complexities and performance of the company as well as skills and experience required. The policies and procedures are periodically reviewed and made available on the company’s website.

Application : Applied

Explanation on : The remuneration of the Directors and Senior Management is reviewed application of the by the Remuneration Committee (“RC”) annually. The determination of practice the remuneration of Directors and Senior Management is guided by the Terms of Reference of the Remuneration Committee, which is available on the Company’s website at www.iwcity.com.my.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

20

Intended Outcome

The level and composition of remuneration of directors and senior management take into account the company’s desire to attract and retain the right talent in the board and senior management to drive the company’s long-term objectives.

Remuneration policies and decisions are made through a transparent and independent process.

Practice 6.2 The board has a Remuneration Committee to implement its policies and procedures on remuneration including reviewing and recommending matters relating to the remuneration of board and senior management.

The Committee has written Terms of Reference which deals with its authority and duties and these Terms are disclosed on the company’s website.

Application : Applied

Explanation on : The RC, established by the Board comprises of all Independent Non- application of the Executive Directors. practice The RC assists the Board in recommending the remuneration of Directors and Senior Management. The RC meets as and when required to review Directors’ remuneration. All Executive Directors other than an Executive Director who hold CEO’s position ， do not benefit from any remuneration package except for the Directors’ allowance, at the same amount received by the Non-Executive Directors (other than the Chairman and the Audit Committee’s Chairman). In the case of Non-Executive Directors, the level of remuneration is determined by the Board as a whole and reflects the experience and level of responsibilities undertaken by the Non- Executive Directors concerned. In all instances, the deliberations are conducted with the Directors concerned abstaining from discussions on their individual remuneration.

The responsibilities of the RC have been formalised into the Terms of Reference which is available on the Company’s website at www.iwcity.com.my.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

21

Intended Outcome

Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance.

Practice 7.1 There is detailed disclosure on named basis for the remuneration of individual directors. The remuneration breakdown of individual directors includes fees, salary, bonus, benefits in-kind and other emoluments.

Application : Applied

Explanation on : The remuneration breakdown of individual directors includes fees, salary, application of the bonus, benefits in-kind and other emoluments are set out on page 30 of practice the Annual Report 2018.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

22

Intended Outcome

Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance.

Practice 7.2 The board discloses on a named basis the top five senior management’s remuneration component including salary, bonus, benefits in-kind and other emoluments in bands of RM50,000.

Application : Departure

Explanation on : The Company refrains from disclosing the details of the remuneration application of the of the top five Senior Management as it is not in the best interests of practice the Company, due to the sensitive and confidential nature of such information.

Nevertheless, the Board would assure that the remuneration of Senior Management commensurate with their individual performance, by taking into consideration of the performance of the Group.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure : As stated above

Timeframe : Others

23

Intended Outcome

Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance.

Practice 7.3 - Step Up Companies are encouraged to fully disclose the detailed remuneration of each member of senior management on a named basis.

Application : Not Adopted

Explanation on : adoption of the practice

24

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.1 The Chairman of the Audit Committee is not the Chairman of the board.

Application : Applied

Explanation on : The Audit Committee is chaired by Mr Khoo Boon Ho, a Senior application of the Independent Non-Executive Director of the Company. practice

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

25

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.2 The Audit Committee has a policy that requires a former key audit partner to observe a cooling-off period of at least two years before being appointed as a member of the Audit Committee.

Application : Applied

Explanation on : The policy which is included in the Terms of Reference of the Audit application of the Committee (“AC”) requires that no former audit partner shall be practice appointed as a member of AC unless he/she has served a cooling off period of at least two years before his/her appointment as a member of the AC. Such Terms of Reference of AC is available on the Company’s website at www.iwcity.com.my.

None of the AC members were former audit partner of the Company’s external auditors, for the financial year under review.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

26

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.3 The Audit Committee has policies and procedures to assess the suitability, objectivity and independence of the external auditor.

Application : Applied

Exp lanation on : The AC is required by its Terms of Reference to assess and monitor application of the the performance, suitability, objectivity and independence of the practice external auditor annually.

During the financial year under review, the AC met up with the external auditors, Ernst & Young (“EA”), twice in the absence of the Management. The external auditors had provided a confirmation to the Committee that they are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements. The AC has monitored and reviewed the performance and independence of the external auditors and is satisfied that the EA has been independent throughout the conduct of the audit process and the audit services rendered have met the expectation of the AC.

Pursuant to the assessment of the EA, the Committee is satisfied with the suitability and independence of the EA and has recommended their re-appointment for the financial year ending 31 December 2019. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

27

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.4 - Step Up The Audit Committee should comprise solely of Independent Directors.

Application : Adopted

Explanation on : All the 3 members of the AC are independent directors. adoption of the practice

28

Intended Outcome

There is an effective and independent Audit Committee.

The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information.

Practice 8.5 Collectively, the Audit Committee should possess a wide range of necessary skills to discharge its duties. All members should be financially literate and are able to understand matters under the purview of the Audit Committee including the financial reporting process.

All members of the Audit Committee should undertake continuous professional development to keep themselves abreast of relevant developments in accounting and auditing standards, practices and rules.

Application : Applied

Explanation on : The AC Chairman is a fellow of the Institute of Certified Public application of the Accountants of Singapore and a member of the Institute of Internal practice Auditors Malaysia. Mr Lim Foo Seng is also a member of the Malaysian Institute of Certified Public Accountants and a member of the Malaysian Institute of Accountants.

All members of the AC are able to understand matters and issues within the capacity of the AC. The committee members possess vast experience, knowledge and understanding on the business and the industry the company operates in i.e. trading, property development, construction etc. Thus, enable the committee to discharge its duties effectively.

During the financial year, the Group organised a training course entitled “Re-designing New Business Values” for all the Directors and Senior Management. The AC members had also attended the said training. In addition, the AC members also attended other trainings to further enhance their skills and knowledge in discharging their role. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

29

Intended Outcome

Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.1 The board should establish an effective risk management and internal control framework.

Appli cation : Applied

Explanation on : The Board acknowledges its overall responsibility for the Group’s application of the system of risk management and internal control to safeguard practice shareholders’ investment and the Group’s assets as well as reviewing its adequacy and operating effectiveness in meeting the Group’s objectives. The Board has established a risk management process to identify, evaluate, control, report and monitor significant risks faced by the Group. Also, the Group has an established organizational structure with clearly defined lines of responsibilities and appropriate levels of delegation and authority to ensure the internal control system is observed.

The Board has delegated its role in the review process to Risk Management Committee. However, the Board as a whole remains responsible for all the actions of the committee with regard to the execution of the delegated role and this includes the outcome of the review and disclosure on key risks and internal control.

The Statement on Risk Management and Internal Control which has been reviewed by the EA is set out on page 33 to 37 of the Annual Report detailing the risk management and internal control framework of the Group.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

30

Intended Outcome

Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.2 The board should disclose the features of its risk management and internal control framework, and the adequacy and effectiveness of this framework.

Application : Applied

Explanation on : The features of the risk management and internal control framework, application of the are outlined in the Statement on Risk Management and Internal Control practice as set out on page 34 and 35 of the Annual Report 2018.

The Board has received reasonable assurance from the EVC and the CEO that the Group’s risk management and internal control system has operated adequately and effectively, in all material aspects, for the financial year under review.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

31

Intended Outcome

Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives.

The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed.

Practice 9.3 - Step Up The board establishes a Risk Management Committee, which comprises a majority of independent directors, to oversee the company’s risk management framework and policies.

Application : Applied

Explanation on : Risk Management Committee consists of all independent directors. adoption of the practice

32

Intended Outcome

Companies have an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework.

Practice 10.1 The Audit Committee should ensure that the internal audit function is effective and able to function independently.

Application : Applied

Ex planation on : The Group’s internal audit function is outsourced to an independent application of the professional firm, which adopts the Internal Professional Practices practice Framework of the Institute of Internal Auditors, an international professional association of internal auditors, in carrying out internal audit assignments on the Group.

During the financial year ended 31 December 2018, the AC reviewed the work of the internal audit function, its observations and recommendations to ensure that the AC obtained the necessary level of assurance with respect to the adequacy and operating effectiveness of the system of governance, risk management and internal control.

Further information on the internal audit function are disclosed in the Statement on Risk Management and Internal Control set out on page 36 of the Annual Report 2018. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

33

Intended Outcome

Companies have an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework.

Practice 10.2 The board should disclose –
whether internal audit personnel are free from any relationships or conflicts of interest, which could impair their objectivity and independence;
the number of resources in the internal audit department;
name and qualification of the person responsible for internal audit; and
whether the internal audit function is carried out in accordance with a recognised framework.

Application : Applied

Explanation on : The Company has outsourced its internal audit function to Axcelasia application of the Columbus Sdn Bhd (“Axcelasia”) . The engagement Executive Director practice of the outsourced internal audit function, Mr Mah Siew Hoong, has diverse professional experience in internal audits, risk management and corporate governance advisory. He is a Chartered Member of the Institute of Internal Auditors Malaysia, a member of the Malaysian Institute of Accountants and a Fellow Member of the Association of Certified Accountants, United Kingdom. He is a Certified Internal Auditors (United States) and has a Certification in Risk Management Assurance (United States).

The number of staff deployed for the internal audit reviews was 4 to 5 staffs per visit including the engagement Executive Director. The staff involved in the internal audit reviews possesses professional qualification and/or a university degree. Most of them are members of the Institute of Internal Auditors Malaysia. The internal audit staff on the engagement are free from any relationships or conflicts of interest, which could impair their objectivity and independence.

The internal audit was conducted using a risk-based approach and was guided by the International Professional Practice Framework (“IPPF”).

Further information on the internal audit function are disclosed in the Statement on Risk Management and Internal Control set out on page 36 of this Annual Report 2018. Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

34

Intended Outcome

There is continuous communication between the company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations.

Stakeholders are able to make informed decisions with respect to the business of the company, its policies on governance, the environment and social responsibility.

Practice 11.1 The board ensures there is effective, transparent and regular communication with its stakeholders.

Application : Applied

Explanation on : The Board recognises the importance of being transparent and application of the accountable to the Company’s shareholders and, as such, has availed practice various channels to maintain communication with them. The various channels are through the quarterly announcements on financial results to Bursa Malaysia, relevant announcements and circulars, annual report, media release, general meeting and Company’s website.

The general meeting is also an important platform for the shareholders to interact with the Board to seek clarifications on any issues and to gain better understanding of the Group’s business affairs and performance, thereby enabling the shareholders to make informed decisions in valuing the Company’s shares. At such meetings, the Board provides opportunity for the shareholders to raise questions pertaining to the Company’s activities. Members of the Board, Senior Management and the external auditors are also present to answer questions raised during the meetings.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

35

Intended Outcome

There is continuous communication between the company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations.

Stakeholders are able to make informed decisions with respect to the business of the company, its policies on governance, the environment and social responsibility.

Practice 11.2 Large companies are encouraged to adopt integrated reporting based on a globally recognised framework.

Application : Not applicable

Explanation on : The Company does not fall under the category of “Large Companies”. application of the practice The Board is mindful to the application of integrated reporting based on a globally recognised framework and would consider to the adoption of such reporting in future.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure

Timeframe :

36

Intended Outcome

Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings.

Practice 12.1 Notice for an Annual General Meeting should be given to the shareholders at least 28 days prior to the meeting.

Application : Applied

Explanation on : The notice for the forthcoming AGM to be held on 20 June 2019, will be application of the given to the shareholders on 30 April 2019, which is at least 28 days practice prior to the meeting.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timefram e :

37

Intended Outcome

Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings.

Practice 12.2 All directors attend General Meetings. The Chair of the Audit, Nominating, Risk Management and other committees provide meaningful response to questions addressed to them.

Application : Departure

Explanation on : application of the practice

Explanation for : 7 out of 9 directors were in attendance in the 49th AGM held on 7 June departure 2018. The EVC and a Non-Independent Non-Executive Director, were absent with apologies due to their other urgent agenda.

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure : All directors endeavour to attend the coming AGM.

Timeframe : Within 1 year

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Intended Outcome

Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings.

Practice 12.3 Listed companies with a large number of shareholders or which have meetings in remote locations should leverage technology to facilitate –
including voting in absentia; and
remote shareholders’ participation at General Meetings.

Application : Applied

Explanation on : The 49th AGM was held in Thistle Johor Bahru, which is in the city of application of the Johor Bahru with convenient accessibility to encourage greater practice shareholder participation and has had all the resolutions set out in the notice of AGM, be voted by way of e-polling with the voting device, as pursuant to paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia.

Shareholders are encouraged to attend all the general meetings and allowed to appoint any person as their proxy(ies) to attend, participate, speak and vote in his/her stead at the general meetings.

Explanation for : departure

Large companies are required to complete the columns below. Non-large companies are encouraged to complete the columns below.

Measure :

Timeframe :

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SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA

Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

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