First of All, I of Living Next to My Cyberjaya Campus at After

ANNUAL 20

12REPORT First of all, I DREAM of living next to my Cyberjaya Campus at After graduation, I look forward to working & living in the booming Iskandar area

When I get married, I will be living close to my parents at

Of course, I would want to bring up my children in an eco-paradise

Finally, I plan to spend my golden years in a tranquil & luxurious setting

Iskandar Malaysia

Iconic residential towers

Elevating luxury with high-rise residential towers that are both TM Southbay Plaza, Batu Maung M-city, Jalan Ampang M-Suites , Jalan Ampang architecturally impressive and One Lagenda, Cheras Icon Residence, Mont’ Kiara www.southbay.com.my 03-2162 8282 www.m-suites.com.my thoughtfully equipped with www.onelagenda.com.my www.icon-residence.com.my www.m-city.com.my lifestyle amenities. N 3º 9’23.37” E 101º 4’19.28” Johor

Austine Suites, Tebrau Mah Sing i-Parc, Tanjung Pelapas The Meridin@Medini 07-355 4888 07-527 3133 1800-88-6788 / 07-355 4888 Lagenda@Southbay, Batu Maung Bayan Lepas Kuala Lumpur www.austinesuites.com.my www.mahsing.com.my www.mahsing.com.my 04-628 8188 N 1º 32’54” E 103º 45’5” N 1º 33.838’ E 103º 35.869’ N 1º 32’54” E 103º 47’5” www.southbay.com.my N 5º 17’7” E 100º 17’18” Johor Bahru

Selangor Ferringhi Residence, Batu Ferringhi 04-628 8188 www.ferringhi-residence.com.my Dynamic integrated developments N 5º 17’7” E 100º 17’18”

Combining commercial, residential and retail components within a Batu Ferringhi Cyberjaya development to provide discerning investors and residents alike with all of the lifestyle oﬀerings of a modern venue. Penang Greater KL Star Avenue, Damansara M Residence & M Residence 2, Rawang www.mahsing.com.my 1300-88-6866 / 03-6092 8188 www.mresidence.com.my N 3º 19.140’ E 101º 30.449’

Niche mid to high-end residences Kinrara Residence, Puchong Icon City, Petaling Jaya 1300-88-6866 1300-88-3993 / 012-227 1998 Providing mid to high-end Sabah www.mahsing.com.my www.icon-city.com.my residential homes in the best Kota Kinabalu N 3º 1’58.95” E 101º 39’58.60” N 3º 5’10.71” E 101º 36’52.13” suited environment to love a lifestyle of relaxation, leisure and family bonding. i-Parc3, Bukit Jelutong Southville City, Bangi Sutera Avenue, Kota Kinabalu www.mahsing.com.my 1300-88-7999 Garden Residence, Cyberjaya 088-488 398 / 019-362 1833 www.southville-city.com www.gardenresidence.com.my www.mahsing.com.my/SuteraAvenue N 5º 58.220’ E 116º 04.025’

Industrial factories Garden Plaza, Cyberjaya Building industrial spaces that are Trends@Southbay 03-8873 1598 / 1603 / 1605 / 0028 altogether pratical, multi-functional 04-628 8188 www.gardenplaza.com.my ans spacious to address the spatial www.southbay.com.my N 2.94679º E 101.67080º needs of a diversiﬁed group of N 5º 17’7” E 100º 17’18” industries. Klang Valley INTRODUCTIONDIRECTORS’1 PROFILE Company Profile Awards Our Developments CORE FACTS CONTENTS Group Five-Year Financial Highlights 2 Corporate Information 4 Corporate Structure 5 Directors’ Profile 6

MESSAGES

Chairman’s Statement 12 Group Managing Director’s Report 20 Review of Operations 27 ACTIVITIES Sustainability Report 38 Calendar of Events 60 GOVERNANCE Corporate Governance Statement 64 Audit Committee Report 76 Statement on Risk Management and Internal Control 80 FINANCIALS

Directors’ Report 84 Independent Auditors’ Report 90 Income Statements 92 Statements of Comprehensive Income 93 Statements of Financial Position 94 Consolidated Statement of Changes In Equity 96 Company Statement of Changes In Equity 98 Statements of Cash Flows 100 Notes To The Financial Statements 103 Statement By Directors 178 Declaration By The Director 179 ADDITIONAL INFORMATION Properties Owned 180 Statistics of Shareholdings 184 Statistics of Warrant Holdings 187

NOTICES Notice of Twenty-First Annual General Meeting 190 Notice of Dividend Entitlement and Payment 196 Statement Accompanying Notice of Annual General Meeting 197 FORM OF PROXY Form of Proxy

MAH SING GROUP BERHAD ANNUAL REPORT 2012 2

GROUP FIVE-YEAR FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 31 DECEMBER

2008 2009 2010 2011 2012 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 651,639 701,562 1,110,108 1,570,696 1,775,260 Profit Before Tax 136,006 144,243 177,865 238,628 315,523 Profit After Tax 92,948 95,841 128,403 168,637 231,768 Net Profit Attributable to Equity Holders 93,168 94,282 118,071 168,556 230,617

Total Assets 1,253,442 # 1,609,944 # 2,195,246 # 2,850,381 3,595,086 Total Borrowings 222,477 220,092 506,580 977,617 910,297 Equity Attributable to Equity Holders 690,275 847,610 918,866 1,073,151 1,244,897 Total Equity 696,610 855,579 936,456 1,088,489 1,255,001

Return on Equity 13% 11% 13% 16% 19% Return on Total Assets 7% 6% 6% 6% 6% Net Gearing/(Cash) ratio 0.07 (0.21) 0.21 0.29 0.26 Basic Earnings per Share (sen) 12.45 * 12.41 * 14.20 20.27 27.61 Fully Diluted Earnings per Share (sen) 12.37 * 12.40 * 14.19 19.74 27.14 Net Assets per Share (RM) 1.10 1.22 1.10 1.29 1.48 Gross Dividend per share 16.0% 13.0% 15.2% 22.0% 15.2% Gross Dividend yield 6.5% 4.5% 4.2% 5.2% 3.7% Dividend Payout Ratio 40.6% 43.0% 40.1% 41.0% 43.7% @ Price Earning Ratio 9.9 11.7 12.6 10.4 7.5 Share price as at the financial year end (RM) 1.23 1.45 1.79 2.10 2.07 ^

# The comparative figures for total assets have been restated to reflect the adjustment following the adoption of FRSIC17 in financial year 2011.

* The comparative figures for basic earning per share have been restated to reflect the adjustment arising from the bonus issue completed during the financial year 2010.

@ The dividend payout for 2012 is estimated based on number of shares as at 31 March 2013 and the proposed bonus issue to be effected in second quarter 2013.

^ Share price is before adjustment on the effect of rights issue with warrants which exercise was completed on 22 March 2013.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 MAH SING GROUP BERHAD ANNUAL REPORT 2012 4

CORPORATE INFORMATION

BOARD OF DIRECTORS OPTION COMMITTEE BANKERS

JEN. TAN SRI YAACOB BIN MAT ZAIN (R) JEN. TAN SRI YAACOB BIN MAT ZAIN (R) Affin Bank Berhad Chairman/Independent Non-Executive TAN SRI DATO’ SRI LEONG HOY KUM CIMB Bank Berhad Director LOH KOK LEONG Hong Leong Bank Berhad Hong Leong Islamic Bank Berhad TAN SRI DATO’ SRI LEONG HOY KUM HSBC Amanah Malaysia Berhad Group Managing Director/ SECRETARIES Malayan Banking Berhad Group Chief Executive OCBC Bank (Malaysia) Berhad YANG BAO LING (MAICSA 7041240) Public Bank Berhad DATO’ STEVEN NG POH SENG KUAN HUI FANG (MIA 16876) RHB Bank Berhad Executive Director P.T. Bank Ekonomi Raharja LIM KIU HOCK REGISTRAR P.T. Bank Permata Tbk Executive Director The Bank of Tokyo-Mitsubishi UFJ, Ltd Tricor Investor Services Sdn Bhd LEONG YUET MEI (Company No. 118401-V) Non-Independent Non-Executive Level 17, The Gardens North Tower STOCK EXCHANGE LISTING Director Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Main Market of Bursa Malaysia Securities CAPTAIN IZAHAM BIN ABD. RANI (R) Tel: 603-2264 3883 Fax: 603-2282 1886 Berhad Independent Non-Executive Director

LOH KOK LEONG REGISTERED OFFICE STOCK SHORT NAME Independent Non-Executive Director Penthouse Suite 1, Wisma Mah Sing MAHSING (8583) No. 163, Jalan Sungai Besi AUDIT COMMITTEE 57100 Kuala Lumpur Tel: 603-9221 8888 Fax: 603-9222 2833 INDEX JEN. TAN SRI YAACOB BIN MAT ZAIN (R) CAPTAIN IZAHAM BIN ABD. RANI (R) FTSE Bursa Malaysia KLCI LOH KOK LEONG AUDITORS WEBSITE Deloitte KassimChan (AF 0080) NOMINATION COMMITTEE Chartered Accountants www.mahsing.com.my Level 19, Uptown 1 JEN. TAN SRI YAACOB BIN MAT ZAIN (R) No. 1, Jalan SS 21/58, INVESTOR RELATIONS LEONG YUET MEI Damansara Uptown CAPTAIN IZAHAM BIN ABD. RANI (R) 47400 Petaling Jaya Tel : 603-9221 8888 Selangor Darul Ehsan Email : [email protected] Tel: 603-7723 6500 Fax: 603-7726 3986 REMUNERATION COMMITTEE

JEN. TAN SRI YAACOB BIN MAT ZAIN (R) TAN SRI DATO’ SRI LEONG HOY KUM LEONG YUET MEI

MAH SING GROUP BERHAD ANNUAL REPORT 2012 ADDITIONAL FORM OF CORE FACTS MESSAGES ACTIVITIES GOVERNANCE FINANCIALS NOTICES INFORMATION PROXY MAH SING GROUP BERHAD ANNUAL REPORT 2012 REPORT BERHAD ANNUAL MAH SING GROUP 5 ACTIVE SUBSIDIARIES CORPORATE STRUCTURE CORPORATE 6

DIRECTORS’ PROFILE

JEN TAN SRI YAACOB BIN MAT ZAIN (R) Chairman/Independent Non-Executive Director

• Malaysian, 77 years of age • Appointed to the Board on 29 June 1994 • Chairman of the Audit Committee • Chairman of the Nomination Committee • Chairman of the Remuneration Committee • Chairman of the Option Committee • Attended all 4 Board Meetings and 4 Audit Committee Meetings convened during the financial year.

Jen. Tan Sri Yaacob had a distinguished career spanning nearly 40 years in Angkatan Tentera Malaysia before retiring in 1993 as a Panglima Angkatan Tentera Malaysia. He had attended courses at the Australian Army General Command and Staff College, the Naval Post Graduate School in Monterey, United States of America, the Royal College of Defence Studies in the United Kingdom and the Advance Management Programme at Harvard Business School.

Apart from his directorship in the Company, he is the Chairman of Affin Investment Bank Berhad, Syarikat Permodalan Kebangsaan Berhad and SPK-Sentosa Corporation Berhad.

There is no conflict of interest between him and the Company nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

DIRECTORS’ PROFILE ESGSATVTE OENNEFINANCIALS GOVERNANCE ACTIVITIES MESSAGES

TAN SRI DATO’ SRI LEONG HOY KUM, P.S.M., S.S.A.P., DATO’ STEVEN NG POH SENG D.P.M.S., J.P., Hon. Ph.D Executive Director Group Managing Director/Group Chief Executive • Malaysian, 47 years of age • Malaysian, 55 years of age • Appointed to the Board on 27 June 2005 • Founder and First Director Appointed to the Board, on 3 • Attended all 4 Board Meetings convened during the December 1991 financial year. • Member of the Remuneration Committee • Member of the Option Committee • Attended all the 4 Board Meetings convened during the financial year.

Tan Sri Dato’ Sri Leong Hoy Kum founded the plastics Dato’ Steven Ng Poh Seng has more than 23 years experience manufacturing division in 1979 and listed Mah Sing Group in audit, accounts, corporate finance and financial investment. Berhad on the Kuala Lumpur Stock Exchange in 1992. He has He holds a Bachelor of Science degree majoring in accounting been on the Central Committee of the 900-member Malaysian from the University of Wales (UK). He is a member of both the Plastics Manufacturers Associations since 1986. He is also the Institute of Chartered Accountants in England and Wales and Honorary President of the Young Malaysian Movement the Malaysian Institute of Accountants. He worked in a Association (YMM) since 1999 and of The Dramatic Art Society, Chartered Accountancy firm in United Kingdom and upon his Malaysia since 1996. Besides that, he is the Vice-President of return to Malaysia, he served as a Manager in Malaysian the Table Tennis Association of Malaysia since 1999. International Merchant Bankers Berhad before joining SP Setia Berhad. After 8 years of service in SP Setia Berhad, he left as Tan Sri Dato’ Sri Leong Hoy Kum is the key driving force behind Head of Corporate Affairs prior to joining the Company. the phenomenal growth and success of Mah Sing Group Berhad. Driven by his determination to maximise shareholders’ value In recognition of his achievements, Dato’ Steven Ng Poh Seng and passion for property, Tan Sri Dato’ Sri Leong ventured into was conferred the Darjah Kebesaran Mahkota Pahang Yang property development in 1994. Being the Group Managing Amat Mulia – Peringkat Kedua Darjah Indera Mahkota Pahang Director/Group Chief Executive, he has been instrumental in (DIMP) which carries the title “Dato’” on the Sultan Pahang’s shaping Mah Sing as a multi-award winning real estate specialist. 82nd birthday on 2nd February 2013. His vast experience spanning over 30 years as well as his entrepreneurial spirit culminated in the Group expanding He is currently the Executive Director of the Company heading rapidly with projects in Malaysia’s main growth corridors, the Group Corporate and Investment division. namely Greater Kuala Lumpur and the Klang Valley, Johor Bahru (Iskandar Malaysia), Penang and Kota Kinabalu, Sabah. There is no conflict of interest between him and the Company INFORMATION

nor are there any family relationships between him and any ADDITIONAL In recognition of his achievements, he was conferred an director or major shareholder of the Company. He has not been honorary Doctor of Philosophy (Ph.D.) in Business convicted for any offences within the past 10 years other than Administration by the Honolulu University, Hawaii in 2000. He for traffic offences, if any. was conferred the Darjah Paduka Mahkota Selangor (D.P.M.S.) which carries the title of “Dato” and the Jaksa Pengaman (J.P.) awards by his Highness, Sultan of Selangor in 1996 and 2001 respectively. Tan Sri Dato’ Sri Leong was conferred the Darjah Kebesaran Sultan Ahmad Shah Pahang Yang Amat DiMulia – Peringkat Pertama Sri Sultan Ahmad Shah Pahang (S.S.A.P.) which carries the title “Dato Sri” on the Sultan Pahang’s 77th NOTICES birthday on 3rd November 2007 and the Darjah Panglima Setia Mahkota (P.S.M.) which carries the title “Tan Sri” in 2009.

He also sits on the Board of Directors of various other private companies.

He is the brother to Director, Ms Leong Yuet Mei. There is no conflict of interest between him and the Company nor has he

been convicted for any offences within the past 10 years other FORM OF than for traffic offences, if any. PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 8

DIRECTORS’ PROFILE

MR LIM KIU HOCK MS LEONG YUET MEI Executive Director Non-independent Non-Executive Director

• Malaysian, 57 years of age • Malaysian, 59 years of age • Appointed to the Board on 30 October 2006 • Appointed to the Board on 17 November 1997 • Attended 3 out of 4 Board Meetings convened during the • Member of the Nomination Committee financial year. • Member of the Remuneration Committee • Attended 3 out of 4 Board Meetings convened during the financial year.

Mr Lim Kiu Hock has more than 30 years experience in property Ms Leong Yuet Mei has been attached to RHB Securities Sdn development. He holds a Bachelor (Hons) Degree in Housing, Bhd as a Dealers Representative since 1991. Prior to that she Building and Planning from the University of Science, Penang. was attached to KAF Discount Berhad as a Senior Accountant. He is a member of The Chartered Institute of Building, United Kingdom (CIOB). He is also a National Committee member of Ms Leong Yuet Mei is the elder sister to Tan Sri Dato’ Sri Leong International Real Estate Federation (FIABCI). He was the head Hoy Kum, the Group Managing Director/Group Chief Executive. of the property division of Berjaya Land Bhd for 13 years, before There is no conflict of interest between her and the Company moving on to MK Land Holdings Berhad as Chief Operating nor has she been convicted for any offences within the past 10 Officer, and then on to Zelan Development Sdn Bhd, a years other than for traffic offences, if any. subsidiary of Tronoh Consolidated Berhad as Managing Director. He is well experienced in handing the development of golf and seaside resorts, shopping malls development and management, residential housing schemes and privatization of projects from the government.

He joined the Company as Business Development Director before being appointed to the Board.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

DIRECTORS’ PROFILE ESGSATVTE OENNEFINANCIALS GOVERNANCE ACTIVITIES MESSAGES

CAPTAIN IZAHAM BIN ABD. RANI (R) MR LOH KOK LEONG Independent Non-Executive Director Independent Non-Executive Director

• Malaysian, 51 years of age • Malaysian, 48 years of age • Appointed to the Board on 16 April 2001 • Appointed to the Board on 23 September 2002 • Member of the Nomination Committee • Member of the Audit Committee • Member of the Audit Committee • Member of the Option Committee • Attended all the 4 Board Meetings and 4 Audit Committee • Attended all the 4 Board Meetings and 4 Audit Committee Meetings convened during the financial year. Meetings convened during the financial year.

Captain Izaham served in the Malaysian Armed Forces for nearly Mr Loh Kok Leong is an accountant by profession and has been 14 years before his early retirement in 1992. He attended attached with various international accounting firms both in various career courses conducted domestically as well as in Malaysia as well as overseas for more than 20 years, out of Australia and Singapore. He was the Business Development which 3 years were dedicated as a partner of Deloitte Touche Manager at the Kukup Golf Resort in Pontian, Johor Tohmatsu Kuala Lumpur. He is currently a partner of a before serving Port Dickson Golf & Country Club as the General professional services firm, Russell Bedford LC & Company. He is Manager until end 2004. a member of the Malaysian Institute of Accountants, the Malaysian Institute of Certified Public Accountants and the Captain Izaham is also a Director in a leading multinational Chartered Tax Institute of Malaysia. petroleum company from the Sultanate of Oman, (MB Petroleum Services Sdn Bhd) and Epicentro Resources Sdn Bhd There is no conflict of interest between him and the Company which deals in Defence Products and is a subsidiary of British nor are there any family relationships between him and any Aerospace (BAE Systems). director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than There is no conflict of interest between him and the Company for traffic offences, if any. nor are there any family relationships between him and any director or major shareholder of the Company. He has not been convicted for any offences within the past 10 years other than for traffic offences, if any. INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 MAH SING GROUP BERHAD ANNUAL REPORT 2012 MAH SING GROUP BERHAD ANNUAL REPORT 2012 12

CHAIRMAN’S STATEMENT

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CHAIRMAN’S STATEMENT MESSAGES CIIISGVRAC FINANCIALS GOVERNANCE ACTIVITIES INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 14

CHAIRMAN’S STATEMENT

Dividend

The Group remains committed to create value and deliver returns to its shareholders, and the Board of Directors has recommended a first and final dividend of 7.5 sen (net) per ordinary share of RM0.50 each consisting of 0.4 sen per share less income tax of 25% and single-tier dividend of 7.2 sen per share for the financial year ended 31 December 2012.

This represents a minimum payout of at least 40% of net profit, in line with the Group’s dividend policy of paying at least 40% of net profit since 2006 and is subject to approval by shareholders at the forthcoming Annual General Meeting.

The Group has been consistently rewarding shareholders, and cash dividends totaling RM69.2 million were paid by the Group to shareholders in September 2012 marking the 6th consecutive year of the Group’s commitment. The Group’s ability to reward shareholders during these years mirrors the uninterrupted profit growth supported by continuous well-planned explorations and acquisitions of selective strategic landbanks for expansion.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CHAIRMAN’S STATEMENT MESSAGES CIIISGVRAC FINANCIALS GOVERNANCE ACTIVITIES

Corporate Exercise

During the financial year, the Group embarked on a renounceable Rights Issue with free Warrants, followed by a bonus issue for shareholders. The Rights issue priced at RM1.42 per Rights Share is on the basis of one share for every 3 existing shares held. This represents a discount of 37.2% to the 5-day volume weighted average market price prior to the announcement of the price- fixing date, or 30.7% to the Theoretical Ex-Rights Price “TERP”. There will be 3 free Warrants for every 5 Rights shares subscribed for and 1 bonus share for 5 existing share held at an Entitlement date to be fixed.

We received total acceptances and excess applications for 332million Rights Shares as at 12 March 2013, the closing date for acceptance and payment of the Rights Issue with Warrants. This INFORMATION represents an oversubscription of 18.55% over the 280million ADDITIONAL Rights Shares with Warrants available for subscription and reflects strong investor confidence in Mah Sing.

The fund raising was completed on 22 March 2013 and raised approximately RM398 million which will part finance our property development expenditure, future land acquisitions and general working capital requirement. This is part of our prudent management of capital structure to maintain a healthy and

optimum capital base. Besides improving the liquidity and NOTICES marketability of Mah Sing Group’s shares, we are also taking the opportunity to reward our shareholders with the bonus shares. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 16

CHAIRMAN’S STATEMENT

Corporate Responsibility

Mah Sing firmly believes in being a responsible corporate citizen and giving back to the community. On 15 June 2012, Mah Sing Foundation organized its inaugural fundraising event themed “An Unforgettable Night of Sharing”. On the night of the Safeguarding the environment in all fundraising, Mah Sing Foundation successfully raised slightly aspects of our business activities means more than RM2.8 million in donations from Mah Sing Group incorporating green features in our Berhad, our corporate and business partners as well as a property projects and promoting personal contribution by our Group Managing Director cum environmentally friendly plastic products. Group Chief Executive Tan Sri Dato’ Sri Leong Hoy Kum. At the event, 15 deserving organizations which are registered non- Each development is designed to governmental and non-profit outfits with the Social incorporate green features including Department of Malaysia received contributions for their cause. energy and water efficiency, environmental protection, indoor environment quality In 2012, Mah Sing Foundation launched a new 12-months CSR and green innovation. Environmental project from November 2012 to October 2013 with Dignity for Management Plan (“EMP”) is prepared Children Foundation, providing financial aid to support their for each project site based on the Primary Education Program and Faisal Cup 2013, a sports recommendations in the Environmental program for underprivileged children. Impact Assessment (“EIA”).

As a responsible corporate citizen, the Group also promotes Selected projects will receive green sustainability in our day-to-day operational activities in order to certifications, and some of the projects achieve a satisfactory balance on bottom-line growth, certified in 2012 include Icon Residence safeguarding the welfare of our people, community and Mont’ Kiara (Green Mark (Certified) environment. Provisional Certificate) in the Klang Valley and Southbay Plaza in Penang island Beyond meeting Bursa Malaysia’s Listing Requirements to (Green Mark (Gold) Provisional Certificate). report on the corporate social responsibility activities we undertake, we have further prepared a Sustainability Report on M City Jalan Ampang in Kuala Lumpur a voluntary basis since our Annual Report 2010. The report which was conferred the Most Iconic detailed between page 38 to page 58 covers our efforts in Green Development in The Malaysian promoting long-term sustainability in terms of economic vitality, Reserve Editor’s Choice Awards 2012 is social relationships with stakeholders and environmental being constructed to meet BCA’s Green compliance. Mark (Certified) and PAM’s GBI (Certified) standards, while Icon City in Petaling Jaya is in the pre-assessment stage for not one, but three green certifications, namely PAM’s GBI, BCA’s Green Mark and USGBC’s Leed.

Other projects at the preliminary stage for green assessments in 2013 include Ferringhi Residence, Penang and Icon Residence Penang.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CHAIRMAN’S STATEMENT MESSAGES CIIISGVRAC FINANCIALS GOVERNANCE ACTIVITIES

In project-related community initiatives, Mah Sing focuses on Since 2008, the plastics division had sponsored students from using our expertise and resources to undertake community lower income families for a technical apprentice course in development activities that improve the well-being and foster plastics injection moulding. Employment service shall be a good and harmonious relationship with the local community. continued with qualified students after completion of the apprentice course and a 1-year contract service. Some of the activities undertaken in 2012 include providing metal rails and fencing surrounding a monsoon drain beside a In November 2012, a total of 10 students from lower income playground, improving infrastructure near our projects, families were sponsored for a 2-year technical apprentice upgrading facilities in an Indian temple and Chinese temple, course in plastics injection moulding through “Skim Perantis fund a proposed market premise, and landscape upgrades to PIMAS”. construct futsal and basketball courts as well as laying of football field and children playgrounds. INFORMATION ADDITIONAL

Our human capital management placed extra focus on learning and development, with new training programs introduced in 2012 customized towards specific Mah Sing recognizes the need to engage and departmental needs. reach out to our customers and to promote community living amongst our home owners. In line with our vision and efforts towards positive transformation, we embarked on 11 sessions of team building exercise involving 515 employees. The intensive Periodically, the Group’s customer relationship NOTICES management (CRM) team organizes community 2 day programme was highly interactive, incorporating key events at residential areas as value-adding learning points on leadership, communication, teamwork services to Mah Sing project’s communities and and group synergy, to align staff towards our vision of locals. Some of the activities include home becoming a world class real estate developer. improvement roadshows, gotong royong and kids’ drawing contest. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 18

CHAIRMAN’S STATEMENT

Awards and achievements 2012 saw the Group continuing to receive recognitions for Mah Sing’s efforts in good governance, responsible management corporate, branding and project achievements. and communication to shareholders also won us the certificate of merit for Annual Report 2011 at the National Corporate Report On the corporate front, Mah Sing Group once again made it to Awards (NACRA) 2012. the Top 10 of The Edge Malaysia Top Property Developers Award 2012, and listed in The Edge Billion Ringgit Club for the Our branding efforts did not go unnoticed as the Group third year running, ever since the inception of the award in received the Putra Brand Awards – Property Development for 2010. both 2012 and 2013, BrandLaureate 2011-2012 Best Brands Conglomerate Awards, BrandLaureate 2012-2103 Best Mah Sing Group was also honoured at the Corporate Property Company and OPP Gold Award for Best Use of Social Governance Asia Recognition Award for the third year running; Media 2012. Mah Sing also received the OPP Silver Award for in 2012, Mah Sing Group won the Corporate Governance Asia Best Luxury Developer Worldwide. Recognition Award organized by the region’s most authoritative journal on Corporate Governance and the Group’s Managing I would also like to congratulate our Group Managing Director Director cum Group Chief Executive, Tan Sri Dato’ Sri Leong Hoy Kum cum Group Chief Executive, Tan Sri Dato’ Sri Leong Hoy Kum for won Best Asian Corporate Director Award. In 2013, we being conferred various leadership awards. Besides the accomplished a hat trick with Tan Sri Dato’ Sri Leong conferred corporate governance and investor relations awards conferred Asia’s Best CEO (Investor Relations) – Malaysia, whilst Mah Sing by Corporate Governance Asia, Tan Sri Dato’ Sri Leong was also won Best Investor Relations Website/Promotion and Best honoured with the 2012 Platinum Entreprenuer Award - the Investor Relations by Company. highest honour in the SME Recognition Awards as well as the Global Leadership Awards 2013 – Lifetime Achievement Award.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CHAIRMAN’S STATEMENT MESSAGES

The property division’s commitment to Moving forward, we believe that the right quality and reliability in delivery has made products in strategic locations with good it one of the leading property developers concepts and design will continue to do in Malaysia and in 2012 as well as the first well, as property is acknowledged as the part of 2013, several of our property best hedge against inflation. Properties projects won various awards. are acquired as a form of wealth preservation and not speculation.

At the 2012 Asia Pacific Property Awards FINANCIALS GOVERNANCE ACTIVITIES (APPA), Mah Sing swept 4 awards namely In fact, as stated in Bank Negara Best Commercial Redevelopment (5 Malaysia’s 2012 Financial Stability and Stars) and Best Office Development Payment Systems report, supply of (Highly Commended) for Icon City houses remains insufficient to meet Petaling Jaya as well as Best High Rise genuine demand for new homes. With Architecture Malaysia Award (5 star) and the changes in demography and increase Best High Rise Architecture Asia Pacific in urbanization, the rise in new home for Icon Residence, Mont’ Kiara, marking buyers over the next few years is likely to the third time that our project will continue, exceeding the average growth represent the region on the world level. in housing stock. We have recently been notified of Legenda@Southbay’s win at the 2013 Our country’s good economic growth, APPA, for Best Leisure Development. healthy employment market coupled Euromoney awarded Mah Sing the Best with the solid foundation of the banking Industrial Developer 2012, reflecting our sector will still drive demand from the win in the International Property Awards domestic as well as foreign markets. 2011 where i-Parc 3 @ Bukit Jelutong was named Best International Industrial We believe that our continued focus in Development. developing market driven, quality products with good themes and On the local front, M City Jalan Ampang concepts, in good locations, coupled with received The Malaysian Reserve Editor’s our delivery and customer service will Choice Awards 2012 for Most Iconic stand us in good stead as we continue to Green Development whilst grow the business. Residence@Southbay Penang was recognized at the Malaysian Landscape In closing, I would like to thank our INFORMATION

Architecture award. management and staff for their ADDITIONAL continued passion and hard work, and we No doubt, these accolades which look forward to continuing this reaffirms our position has only been phenomenal growth, together. achievable thanks the hard work and of our entire team, and reflects the On behalf of the Board, our deepest commitment of team Mah Sing. thanks goes to our shareholders, business associates, customers, the Government Continuing growth, together and the local authorities for their confidence and trust in the Group

2013 will be another exciting year, with 7 throughout these years. NOTICES new projects in the pipeline which will drive our growth. These are Southville With all the continued support provided City, M Residence 2 and the newly by our internal and external stakeholders, acquired D’sara Sentral in the Klang we look forward to another year of solid Valley, Ferringhi Residence in Penang growth ahead. island, Mah Sing iParc@Tanjung Pelepas and The Meridin@Medini which are located in Iskandar Malaysia and Sutera JEN. TAN SRI YAACOB BIN MAT ZAIN (R)

Avenue in Kota Kinabalu, Sabah. CHAIRMAN FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 20

GROUP MANAGING DIRECTOR’S REPORT

2012 was a historic year for the Group, as we launched our “Realizing Dreams” property and lifestyle showcase to commemorate our 18th anniversary in property developments.

We chose the “Realizing Dreams” concept in line with what we have been doing for the past 2 decades – realizing our buyers’ dreams of owning a prime property which is a beloved shelter and an astute investment, the best hedge against inflation.

11 landed residential, high rise residential and commercial projects in Greater KL, the Klang Valley, Penang island and Johor Bahru/Iskandar Malaysia were selected for the campaign which focused on making it easier for buyers to own their dream property, with extra incentives for existing buyers in our M Club customer loyalty programme.

The continued strong sales achievement of RM2.5billion in 2012 This optimism and confidence in the property market has been solidified our leadership position in the local property industry. proven correct, with the strong growth trajectory of our sales Our unbilled sales continued to advance to approximately achievement which more than tripled from RM727million in RM3.16billion as at 31 December 2012, equivalent to 2009 to RM2.5billion in 2012. approximately 2 times the revenue recognized from the property division in the same year. The strong unbilled sales As at early April 2013, the Group has a remaining GDV and position enables visibility over near term performance and unbilled sales of approximately RM19.7 billion from our 41 assures a steady stream of cash flows and liquidity. projects, and these should last the Group for the next 6 -8 years.

Having exceeded 2012’s landbanking target of RM5billion by clinching 4 land deals with combined gross development value of RM5.88billion, the Group is off to a good start in 2013 with the recent acquisition of D’sara Sentral in Sg Buluh, with estimated gross development value of RM800million.

Mah Sing is no stranger to the locality, which has garnered much interest in recent years due to the 3,300-acre Rubber Research Institute of Malaysia (RRIM) privatization land which is just next to D’sara Sentral. A mere 6km away, our commercial project Star Avenue@D’sara located just 3 minutes from the proposed MRT station in Taman Industri Sg Buluh was launched in 2011 and is nearly 100% sold. In fact, D’sara Sentral is just diagonally opposite the MRT station next to the RRIM land and there will be a direct bridge linkage. Buyers are obviously optimistic of the RRIM land potential, and the upcoming MRT line has compounded interest in the area.

Mah Sing has been judiciously buying prime land in strategic locations to build a strong pipeline for sustainable growth. Over the past 4 years from 2009 to 2012 we acquired close to 1,500 acres of land with total estimated GDV of RM17.4billion. This is nearly 4 times the total revenue of RM4.4billion recognized from the property division in the same period.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

GROUP MANAGING DIRECTOR’S REPORT MESSAGES

Another record breaking year

Mah Sing Group Berhad delivered yet another record-breaking year in 2012 with revenue and net profit at RM1.78 billion and RM230.6 million respectively. This represents improvement in revenue and net profit of 13% and 37% respectively FINANCIALS GOVERNANCE ACTIVITIES as compared to the previous year.

Property development projects that contributed to the results included:

Greater KL and Klang Valley i) Landed residential developments namely Kinrara Residence in Puchong, Garden Residence and Clover@Garden Residence in Cyberjaya, Perdana Residence 2 in Selayang, Aman Perdana in Meru - Shah Alam, M Residence in Rawang, One Legenda, Hijauan Residence and Bayu Sekamat in Cheras. ii) High rise residential developments In addition to these projects, new ii) Integrated commercial development including Garden Plaza in Cyberjaya, projects which are expected to further Southhbay City. M-Suites and M-City in Jalan boost the Group’s performance in the Ampang, Icon City in Petaling Jaya future include: Iskandar Malaysia/Johor and Icon Residence in Mont’ Kiara. Greater KL and Klang Valley i) Integrated development Meridin iii) Integrated commercial developments @Medini. such as Star Avenue @ D’sara, i) Landed residential developments Southgate Commercial Centre in namely M Residence 2 in Rawang ii) Industrial development Mah Sing INFORMATION

Sungai Besi, and StarParc Point in and Southville City@KL South. i-Parc @ Tanjung Pelepas. ADDITIONAL Setapak. ii) High rise residential development Kota Kinabalu, Sabah iv) Industrial developments i-Parc 1, namely Star Residence in Subang. i-Parc 3 in Bukit Jelutong and i-Parc 2 i) Integrated development Sutera in Shah Alam. iii) Integrated commercial development Avenue. such as D’sara Sentral in Sungai Penang island Buloh. i) Landed residential developments Penang island

Residence @ Southbay and Legenda NOTICES @ Southbay. i) High rise residential development Ferringhi Residence and Icon Iskandar Malaysia/Johor Residence, Georgetown. i) Landed residential developments Sierra Perdana, Sri Pulai Perdana 2 and Austin Perdana. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 22

GROUP MANAGING DIRECTOR’S REPORT

Plastics

In terms of property segments, the The plastic segment continued to residential sub-sector was the main contribute positively to Group revenue contributor as per previous years, and profit in 2012. Revenue for the consisting 77% of the sales registered segment grew by 3% to RM208.8 million in 2012 followed by the commercial sub- compared to RM202.1 million in 2011. The sector and industrial sub-sector at 21% segment recorded net profit of RM10.9 and 2% respectively. million for financial year 2012.

Greater KL and Klang Valley remains the Mah Sing’s plastics division comprises stronghold for the Group’s property operations in Malaysia and Indonesia. projects with 71% of sales registered Towards the end of 2012, our plastics from this region, Penang island and division in Malaysia further invested in Iskandar Malaysia/Johor Bahru each 2 units of ultra large injection machines contributed 12% and Kota Kinabalu, of 4,000 tonnes clamping force to Sabah contributed 5%. This is a showcase boost our production capacity. The of the Group’s successful fast turnaround increased production capacity from is to business model, considering that the land meet growing market demand for plastic for Sutera Avenue, Kota Kinabalu was pallets, both for the local and export only acquired in March 2012. market. In October 2012, PTMSI commenced operations in a new factory With the positive responses towards our in Kerawang Timor, Indonesia. The new launched projects, we foresee that we factory is about 30km from the present are able to meet our sales target of at factory in Cikarang Jakabeka, and the least RM3billion for 2013 backed a launch expansion is to meet escalating market target of at least RM3.7billion. demand from the growing automotive industries in Indonesia for the next 5 years.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

GROUP MANAGING DIRECTOR’S REPORT MESSAGES

Property development

2012 was notable in terms of Moving forward we shall continue to landbanking, not just because we procure good lands that can be value exceeded our landbanking target, but added with good themes, concepts and also because of the types and location of designs to suit market needs. An lands acquired. additional criterion would be the land’s

suitability for a fast turnaround, in line FINANCIALS GOVERNANCE ACTIVITIES We have been very particular about the with the Group’s business model. landbank we buy, and besides our fast turnaround projects, we have also been Numerous projects have been launched on the lookout for sizable township lands. successfully after thorough research on In 2012, we successfully acquired both market needs, trends and latest niche and township projects. innovations. The Mah Sing brand is anchored on the delivery of our premier We added 2 new townships in the Klang lifestyle promise be it a high end or mass Valley, clinched our maiden project in market project, backed by impeccable Kota Kinabalu, Sabah, and expanded our customer service and on-time deliver. presence with an integrated project in Iskandar Malaysia. Moving forward, we shall continue going the extra mile, as can be seen with efforts In the first quarter of 2013, we acquired like obtaining MSC status for integrated D’sara Sentral in Sungai Buluh. With the developments like Icon City Petaling Jaya, scarcity of development land along the achieving various green certifications MRT line, we are confident that buyers such as PAM’s GBI, BCA’s Green Mark abd would recognize the potential of the area USGBC’s Leed as well as ensuring that our and how this will translate into value and developments obtain CONQUAS quality returns in the near future. certifications.

As you can see, there is a compelling We shall continue to tap on the sustained reason for us to buy each and every piece demand for property due to urban of land. migration, new household formation and good employment market, coupled with a latent shortage of houses in the market INFORMATION

every year. ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 24

GROUP MANAGING DIRECTOR’S REPORT

Landbanking exercise in 2012

Project Acquisition Land Cost *Expected Comments size (RM GDV (acre) Million)

M Residence 2, February 157 41 650 Planned as a gated and guarded township, Alpine, the Rawang, first phase of M Residence 2 was previewed in end Klang Valley March 2013. As at April 2013, the show village has been completed and 80% of the units previewed have been pre-selected.

M Residence 2 offers resort-style living, with a 26 acre natural lotus lake complemented by parks and wetlands within the township.

The project is located strategically along Jalan Batu Arang, just 10 minutes from North-South Highway’s Rawang toll and AEON Rawang Anggun. A proposed direct link to the Kuala Lumpur-Kuala Selangor Expressway (LATAR), from Jalan Tasik Puteri which straddles M Residence 1 and M Residence 2 is expected to benefit home owners in terms of added access and potential capital appreciation.

Sutera Avenue, March 4.2 39 502 Sutera Avenue occupies one of the most prominent CBD Kota Kinabalu, sites in Kota Kinabalu City. It is located diagonally Sabah opposite the 5-star Sutera Harbour Resort and KK Times Square, and has direct road frontage to the Coastal Highway, one of Kota Kinabalu’s main thoroughfares. The Kota Kinabalu International Airport is just 3.9km away

With a matured prime location and ready infrastructure, we were able to achieve a quick launch, and Sutera Avenue contributed sales of RM129milllion or 5% of RM2.5billion achieved in 2012.

For the second phase of launch, we intend to offer serviced residences indicatively priced from RM585,000 for a 700sqft unit.

Southville City, May 420 341.2 3,630 Southville City is Mah Sing’s largest township thus far, KL South, and has garnered more than 12,000 registrants as at Klang Valley early May 2013.

Located along the North South Highway, just 3.2km from UKM (University Kebangsaan Malaysia), we are planning a new interchange just 2.5km from the existing Bangi interchange to allow direct access to the project.

The sales gallery is located in Hotel Nouvelle and the first phase – Savanna Executive Suites are indicatively priced from RM280,000 for a 3 bedroom layout.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

GROUP MANAGING DIRECTOR’S REPORT MESSAGES

Project Acquisition Land Cost *Expected Comments size (RM GDV (acre) Million)

Meridin@ October 8.19 74.7 1,100 Meridin@Medini is located in Zone A of the booming Medini, Iskandar Malaysia special economic zone, FINANCIALS with main GOVERNANCE ACTIVITIES Iskandar road frontage of Persisiran Pantai JB-Nusajaya, the Malaysia protocol road leading to Johor’s new administrative center, Kota Iskandar.

The project is a stone’s throw away from Legoland as well as the upcoming financial hub, Medini Business, and is only 10 minutes from the Tuas Singapore second link and 30 minutes from Senai Airport. The close proximity to the second link and thence to Jurong is a boon to the project which is expected to attract both Malaysians working in Singapore and Singaporeans.

The Meridin@Medini will be a purpose built development with a Live, Work, Relax and Rejuvenate concept comprising Meridin Suites residences, Meridin Linx small office versatile offices (SoVo), Meridin Walk lifestyle retail and Meridin Exchange corporate towers.

Total 589.39 495.9 5,882 Total GDV Exceeds original target by 18%

Landbanking exercise in 2013

Project Acquisition Land Cost *Expected Comments size (RM GDV (acre) Million) INFORMATION

D’sara Sentral, April 6.55 85 800 D’sara Sentral is located diagonally opposite the ADDITIONAL Sungai Buloh, upcoming MRT station next to the RRIM land and Greater KL comprises SoVo (small office versatile office), retail space and serviced residences. It will be directly linked to the MRT station which will be the first station after the Sungai Buluh terminal.

Total 6.55 85 800

*Expected gross development value of the project as announced NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 26

GROUP MANAGING DIRECTOR’S REPORT

Continued growth from a position of strength

Of the Group’s remaining undeveloped landbank of 1,430 acres, 92% are still between the growth and planning stages of their life cycle, providing us ample opportunity to value add to the project.

We have maintained prudent fiscal discipline and despite our land acquisitions, the fast take-up rate, improved operational efficiency, timely execution and delivery of quality property units ensured the Group’s balance sheets remained strong with net gearing at 0.26 times, comfortably below management’s optimal gearing target of 0.5times. We are in a strong position to continue our expansion drive via landbanking exercises and development activities

Our “Realizing Dreams” 18th Anniversary celebrations showcased how easy it is for buyers to select a Mah Sing property as we are one of the few developers to build landed and high-rise residential, commercial and even industrial products in all the property hotspots, namely Greater KL, Penang island, Johor Bahru, and Sabah.

Mah Sing’s diversification provides us the flexibility to offer a property for every need, in a location that is appealing to buyers. Thus far, we have been spot-on with market demand in terms of our launches and are optimistic that we can continue our strong sales momentum to meet our RM3billion sales target for 2013.

Riding the strong momentum from 2012, we are facing an exciting 2013 from a position of strength. With the commitment from our motivated and dedicated team members and continued support from our customers, we look forward to another good year in 2013.

TAN SRI DATO’ SRI LEONG HOY KUM GROUP MANAGING DIRECTOR/ GROUP CHIEF EXECUTIVE

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

REVIEW OF OPERATIONS MESSAGES

UPDATES OF KEY PROJECTS

Landed Residential Development – Greater KL & Klang Valley

One Legenda, Cheras

This multiple award winning project The first gated and guarded landed FINANCIALS GOVERNANCE ACTIVITIES comprising 26 units of 3 storey bungalows development with a host of facilities in were handed over ahead of schedule by Cyberjaya, Garden Residence only 20 9 months. Despite the speedy construction, minutes to Kuala Lumpur City Center via this project received a high CONQUAS the Maju Expressway. Boasting a resort score of 79 projects, testament to the concept, Garden Residence is also gated built quality of these luxury residences. and guarded with perimeter fencing for These bungalows offer build-up areas of individual precincts for exclusivity. It 6,000 sq. ft. on average land sizes of promotes communal living through its 8,000 sq. ft. Each individual bungalow private clubhouse and various facilities would be equipped with an in-house lift and amenities. as a user friendly feature for the elderly or disabled. Its avant garde modern The final phase – Aspen bungalows with minimalist architectural design provides comfortable lot sizes of 60’ x 90’ and maximum privacy and comes with its very spacious built-up areas of 7,796sqft. were own clubhouse facilities. reserved for a build then sell concept.

Garden Residence, Cyberjaya Limited to only 69 units, each bungalow is equipped with a lift and comes with More than 450 units of superlink homes 9+1 rooms to cater to individual needs as well as 2 and 3 storey semi-detached and lifestyles. The homes have been homes were handed over to homebuyers designed with a dedicated entertainment in 2012, marking the maturation of floor, as well as a private rooftop garden Garden Residence, Cyberjaya which was with outdoor Jacuzzi. These bungalows launched in 2010. will be completed in 2013.

In keeping with the concept of a self- INFORMATION

contained township, there are a number ADDITIONAL of lifestyle retail units that are expected to be completed and operational in 2015. NOTICES FORM OF PROXY

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REVIEW OF OPERATIONS

Southville City@KL South

This 420 acre integrated township will Southville City neighbours Bandar Baru combine the best of modern living, Bangi, the Knowledge City of the country. leisure, relaxation and entertainment More than 20 institutes of higher learning within a self-contained community. A are located here, including UKM, UPM, proposed direct interchange approximately UTA, University of Nottingham, the 2.5km from the existing Bangi interchange German-Malaysian Institute and MMU. on the North-South Highway means that The well-planned community also have a KL city center is only 25km away. potential catchment of 1.2 million people from neighbouring Bandar Baru Bangi, Heeding the government’s clarion call for Kajang, Putrajaya, Cyberjaya, Nilai and affordable mass market housing for Semenyih. Southville City can also attract the middle class, the first phase of the residents from Petaling Jaya and KLCC as project will be the Savanna Executive they are all within a 30km radius. Suites. A 3 bedroom suite from 956sqft is indicatively priced from only RM280,000, A sales gallery will be opened in Nouvelle attracting interest from more than Hotel by mid 2013. 12,000 registrants. These potential buyers also indicated interst for the 3 storey garden link homes and 2 and 3 storey lifestyle retail shops.

1300-88-7999 www.southville-city.com

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

REVIEW OF OPERATIONS MESSAGES

Kinrara Residence, Kinrara

Close to 450 units of 2 and 3 storey link In terms of construction, Phase 1 is homes in Phase 2B and 2C were delivered already 50% completed with Phase 2A in 2012. By the first half of 2013, some and 2B 40% and 30% completed, 128 units of 2 storey and 3 storey semi- respectively. Commencement of work for detached homes and bungalows in Phase Phase 3 began on 15 February 2013. The

3A will be handed over, with 142 units of first commercial component of M FINANCIALS GOVERNANCE ACTIVITIES 3 storey semi detached homes and Residence, namely M Avenue, was bungalows slated for handover by early previewed in February 2013, with 6 second half of 2013. blocks of 22’ x 75’ 2-storey shop offices and a row of 24’ x 80’ 3-storey shop With the project reaching maturity, we offices opened to public. anticipate strong demand for the final phase of bungalows. Phase 4 of Kinrara M Residence 2’s Phase 1 was previewed Residence comprising 145 units of 3 in March 2013 and 163 units of the 203 storey semi detached homes and previewed 20’ x 65’ link homes were bungalows are currently being taken up. There are a total of 415 units in constructed, with expected delivery date Phase 1. In addition to the Bukit Badong in the beginning of 2015. Forest Reserve that is adjacent to M Residence, M Residence 2 benefits from The project’s impressive clubhouse a naturally occurring 26acre lotus lake equipped with facilities such as and a gated and guarded concept with swimming pool, wading pool, changing multi-tier security. rooms, gym room and a community centre has been completed for the In addition to its close proximity of 10km exclusive use of residents. A direct access from the North-South Highway’s Rawang to the clubhouse namely Persiaran Damai toll, the proposed direct link from Jalan 1300-88-6866 / 03-6092 8188 Utama Satu was also completed in 2012, Tasik Puteri, which straddles both www.mresidence.com.my adding to the convenience for residents. townships, to the LATAR Highway is set N 3º 19.140’ E 101º 30.449’ to increase accessibility and boost M Residence and M Residence 2, Rawang property values.

Distilling the need for affordable INFORMATION beginner homes in well-planned ADDITIONAL townships, M Residence and M Residence 2 in Rawang were two land banks bought within 4 months of each other with M Residence’s 226 acres purchased in October 2011 and the additional 157 acres forming M Residence 2 purchased in February 2012.

M Residence was previewed in December

2011 and officially launched in April 2012, NOTICES which saw the entire Phase 1’s 214 units of 18’ x 70’ link homes completely sold out, while Phase 2A’s 110 units and Phase 2B’s 118 units of 22’ x 80’ link homes were fully taken up end of 2012. Phase 3’s 159 units of 22’ x 80’ super link homes has seen 90% take up rate with Phase 4’s 22’ x 80’ super link homes and 40’ x 85’

Semi-dees to be previewed in the FORM OF upcoming year. PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 30

REVIEW OF OPERATIONS

Landed Residential Development – Penang Island

Bayu Sekamat, Cheras Legenda@Southbay

42 units of link homes which were fully Legenda@Southbay won the Silver for sold upon launch are expected to be Best Luxury Developer Worldwide at the handed over in the second quarter of Overseas Property Professional (OPP) 2013. Despite being a mass market Awards 2012 and Best Leisure product, these link homes are tastefully Development at the Asia Pacific Property designed, with built quality complying Awards’s International Property Awards with CONQUAS standards. 2012/2013.

Aman Perdana, Klang Designed with the luxury of leisure in mind, the show village was completed in Our first township in the Klang Valley is 2012 with 40% of construction close to maturity, with 87 units of 2 underway. Expected for completion in storey bungalow in Parcel Eb handed November 2013, the 3 storey bungalows over in 2012. This will be the last phase of in an exclusive low density township of landed residential component left with only 3 units per acre will also benefit from the remainder being the high-rise the completion of the Second Penang residential and commercial components. Bridge slated for completion in September 2013. In 2012, there were 320 apartment units that are under construction and due for Landed Residential Development – 04-628 8188 completion in July 2014. In Phase S2, Johor Bahru/Iskandar Malaysia www.southbay.com.my there are 48 units of 2 storey and 3 storey N 5º 17’7” E 100º 17’18” shop offices that are under construction Sri Pulai Perdana 2 during 2012. These shop offices are targeted for completion by the end of 96 units of 32’ x 70’ 2 storey linked semi- 2013. detached homes within Parcel D of this gated and guarded enclave were handed over in 2012. Within the year, the residents’ only clubhouse was completed and residents from the earlier phases also benefitted from this development.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

REVIEW OF OPERATIONS MESSAGES

High-Rise Residential Development – Greater KL & Klang Valley

M Suites Jalan Ampang

The commercial component, Parcel F’s M Suites’ 442 units of service apartments 22’ x 70’ 3 storey shop offices are and 8 retail shops are housed within two expected to be handed over by the 20-storey towers along Jalan Ampang, FINANCIALS GOVERNANCE ACTIVITIES second quarter of 2013. The 32 retail just 3km away from the iconic KLCC units are expected to be completed and towers. Construction of the project is at fully operational in 2013, with the direct an advanced stage, with the handing over access to the Skudai-Pontian Federal expected in the last quarter of 2013. Expressway increasing visibility and accessibility to the units. Icon Residence, Mont’ Kiara

Sierra Perdana The Mediterranean-inspired icon in Klang Valley’s most famous expatriate borough This guarded township saw the presents low-density exclusivity with 290 completion of 100 units and 75 units of 2 units of its luxury serviced residences storey terrace houses in Precinct D3’s spread through 3 towers with only 2 to 6 Section 2 and Section 3 respectively. In units per floor. The beauty of having addition to this, Precinct D2’s 126 units of modular units juxtaposed one against the 2 storey terrace houses were also other ensures all units enjoy KL’s completed. magnificent skyline views and its’ energy and water efficiency are marks of its Moving forward, 176 units of Precinct sustainability compliance to both E1a’s 2 storey cluster homes and 18 units Malaysia’s Green Building Index (GBI) and of 2 storey Semi-Ds within a gated and Singapore’s BCA Green Mark. Tower 3 guarded enclave are projected to be was previewed in February 2013, and has complete by mid-2013. Meanwhile, 98 already seen take up of approximately units of 2 storey terrace homes in 60%. The entire project is at an advance Precinct B3a are expected to be handed stage of construction, with superstructure over in the following quarter of 2013. up to level 16. The project is expected to be handed over in the second quarter INFORMATION

The commercial component of the of 2014. ADDITIONAL township is located on Precinct C1 and C2 with both consisting of 2 storey and 3 storey shop offices. Precinct C1 saw a total of 44 units of shop offices handed over with forty-two units of the two storey shop offices completed with the balance being the three storey shop offices. Meanwhile, Precinct C2’s 84 units of 3 storey shop offices and 86 units of 2 storey shop offices are slated for NOTICES completion in the third quarter of 2013. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 32

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Commercial Development – Greater KL & Klang Valley

Garden Plaza, Cyberjaya Star Avenue@D’sara, Sungai Buloh

Garden Plaza’s fully-furnished towers With its strategic location at the crossroads of Cambridge, Oxford and Harvard of Jalan Sungai Buloh (Guthrie Corridor), proffers effectively planned 3 bedroom Persiaran Cakerawala and Jalan Lapangan units from 450 sq ft and above. With Terbang Subang, Star Avenue@D’sara is competitive entry points, it was no highly visible with more than 300,000 surprise that both Oxford and Cambridge, daily passing traffic and boasts of an which were previewed first in 2012 estimated surrounding catchment of received close to 90% take up rates. The 360,000 people with no competing mall last remaining tower, Harvard, was nearby. Set to be a lifestyle shopping previewed towards the last quarter of haven targeting youngsters and families, 2012 and is seeing brisk take up from Star Avenue@D’sara will also benefit discerning purchasers. from the proposed MRT station in Taman Industri Sg Buluh 3 minutes away. We believe that its strategic location opposite the LimKokWing University The strong interest from potential of Creative Technology (LUCT) and direct retailers could also be attributed to the link to the Damansara-Puchong Expressway upcoming Help University College – (LDP) will contribute to its continued Subang 2 Campus nearby. The 26-acre success in Cyberjaya. In 2012, the campus which can accommodate 13,000 construction reached superstructure to 16,000 students is undergoing level with two floors of basement carpark construction, with the first phase expected completed. to be completed in end 2014. Meanwhile, the first phase of Star Avenue@D’sara is High-Rise Residential Development – expected for completion by early 2014 Penang Island and Phase 2 by end of 2014 to early 2015.

Ferringhi Residence Tapping on the appeal of this project as a new retail destination, ample car park Nestled amidst the emerald hills that space with more than 1,500 bays on the oversee the golden beaches of Penang’s ground floor and the basement level has renowned tourist belt of Batu Ferringhi, been designed. In 2012, work on this Ferringhi Residence is the epitome of space was underway with basement luxurious resort living within a gated and works for the 62 units of shop office in guarded enclave. Comprising three Phase 1 hitting 80% completion rate 04-628 8188 segmented precincts, each with its own while the basement works for the Street www.ferringhi-residence.com.my entrance statement, the first phase, Mall in Phase 2 will commence within the N 5º 17’7” E 100º 17’18” Precinct 1’s, 5 storey condo villas was second quarter of 2013. Phase 2 is launched in December 2012 with the first expected to be completed by end 2014. phase having achieved close to 100% take up. Currently, earth works and the construction of the show village is in progress with a targeted completion by the end of 2015.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

REVIEW OF OPERATIONS MESSAGES

Industrial Development – Greater KL & Klang Valley

Star Parc Point, Setapak iParc@Bukit Jelutong, iParc2@Shah Alam and iParc3@Bukit Jelutong The 3 storey shop offices handed over in 2012 amounted to 24 units with the The iParc is a master stroke in creating completion of the entire project in May multi-functional spaces within semi- FINANCIALS GOVERNANCE ACTIVITIES 2012 while the Certificate of Completion detached factories which cover both and Compliance was obtained in July of front-end and back-end operations such 2012. With its prime location opposite as corporate offices and show galleries in Festival Mall, subsale interest for the front and production and warehousing at shops has been strong, with values the back. Coupled with tremendously doubling upon completion of the project. strategic locations that open up accessibility to logistics hubs, it is no Moving forward, the 6 storey retail surprise that the iParc series has opened offices have seen another 110 units out up a boutique industrial niche within the of 132 units handed over in December industrial property segment. 2012 with the CCC issued in February 2013. There has been numerous leasing iParc@Bukit Jelutong’s 42 units of 3 storey enquiries for the project, coming mainly semi-d factories has been successfully from f&b operators attracted by the handed over in May 2012. Its successful captive market and prime location. sequel, iParc2@Shah Alam also saw the 07-527 3133 completion of 71 units of 3 storey semi-d www.mahsing.com.my factories and terrace factories, this time, N1º 33.838’ E 103º 35.869’ in November 2012.

iParc3@Bukit Jelutong, in the meantime, has seen the completion of construction of 36 units of 3 storey semi-d factories and terrace factories. With the CCC application in progress, the targeted VP date is aimed for the middle of 2013. INFORMATION ADDITIONAL NOTICES FORM OF PROXY

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Industrial Development – Johor Integrated Development – Greater KL Bahru/Iskandar Malaysia & Klang Valley

Mah Sing iParc, Iskandar Malaysia M City, Jalan Ampang

Located just 1 km away from the Port Just 2km from M Suites and 5km from of Tanjung Pelepas (PTP), within the KLCC, the integrated project of M City’s Flagship Zone C: Western Gate of had its foundation laid and the basement Iskandar Malaysia and the Tanjung and podium under construction. The Pelepas Free Zone, Mah Sing iParc is a target completion date in 2015 will see definitive beneficiary of the tremendous its 25 retail lots, 401 SOHo and 1,422 logistics link that includes direct rail link serviced apartments housed within a to southern Thailand, the Pasir Gudang three tower blocks come to fruition for Port via the Pasir Gudang Highway and discerning buyers. the Senai International Airport via the Second Link to Tuas. In 2012, M City’s over 4 acres of multi- thematic hanging gardens spread out Speaking of Tuas, the second link to over 6 floors powered its win of the Singapore is connected directly to the Most Iconic Green Development at the Port of Tanjung Pelepas and is 23km from Malaysian Reserve’s Editors’ Choice the Jurong Industrial Estate in Singapore. Awards 2012 which also recognized the After the freehold land was acquired in integrated development’s sustainable April 2011, the integrated industrial and features that will be certified with business park was officially launched in Malaysia’s Green Building Index (GBI)’s December 2012. Gold standard.

In 2012, the earth works were in progress with construction of superstructure to proceed in 2013. All components within this industrial park are expected for completion in 2015 and will be handed over according to phases.

03-2162 8282 www.m-city.com.my N 3º 9’23.37” E 101º 43’ 19.28”

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

REVIEW OF OPERATIONS MESSAGES

Icon City, Petaling Jaya Integrated Development – Penang Island Standing tall at the intersection of the Federal Highway and the Damansara- Southbay Plaza, Southbay City Puchong Expressway (LDP), Icon City stands out as a green architectural The first integrated component in marvel with the first phase comprising 30 Southbay City, Southbay Plaza offers

Jewels (7 and 8 storey lifestyle shop 206 units of residential suites housed in FINANCIALS GOVERNANCE ACTIVITIES offices), slated for completion in 2015. 2 towers and 47 units of lifestyle retail units spread throughout 4 floors. The Other products within the first phase lifestyle retail units, also known as includes an impressive Central Park, Trends@Southbay was previewed in Gourmet Street (1 storey and 2 storey August 2012 and is nearly completely retail shops), i-SoVo (Small Office taken up by 2013. Meanwhile, the Versatile Office), Icon Residenz (serviced residential suites of Southbay Plaza were residences) and a 9-storey office tower also well accepted with more than 60% sitting on a 4 level retail podium. taken up. In 2012, the laying of the foundation commenced and is in To capitalize on the prime location, there progress. The entire phase is targeted for will be a direct ramp from the Federal completion by April 2016. Highway leading into Phase 1 of the project. A well-planned traffic dispersal Integrated Development – Johor system will improve ingress and egress Bahru/Iskandar Malaysia into Icon City, as well as ease the traffic at the LDP and Federal Highway The Meridin@Medini intersection. With a Live, Work, Relax and Rejuvenate 2012 mainly saw the construction of the concept, The Meridin@Medini will comprise foundation and basement of Phase 1 of Meridin Suites residences, Meridin Linx Icon City. Icon Residenz Tower 1 and the small office versatile offices (SoVo), i-SoVo components are expected for Meridin Walk lifestyle retail and Meridin completion by the end of 2015, while the Exchange corporate towers. Standing on Gourmet Street is expected for 8.19 acres, The Meridin @ Medini was completion in the third quarter of 2015. bought in October 2012 and has a INFORMATION

Due to the good response of Icon confirmed permitted gross floor area of ADDITIONAL Residenz Tower 1, Tower 2 is slated for a 2.14million square feet. mid-2013 launch.

It is envisioned that Phase 2 of the project will comprise of complementary products such as hotel, retail mall, corporate office tower etc. NOTICES FORM OF PROXY

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REVIEW OF OPERATIONS

Integrated Development – Kota Kinabalu, Sabah

Sutera Avenue, Kota Kinabalu

Registration of interest commenced the Sutera Avenue debuts one of the more same day the lease purchase agreement innovative retail concepts in KK -the was signed and by the time the first integrated commercial concept offering component, Meridin Suites was previewed a chance to live, work and enjoy all in one in the second quarter of 2013, we have place. received more than 4,000 registrants for the project. Shopping within this integrated complex is plentiful whether at the Lifestyle Retail Comprising a total of three towers, Lots, which faces the Coastal Highway at layout designs available are from 1 to 3 its main façade, while its dual-frontage bedroom units with built-ups from design welcomes shoppers from its 520 sq ft onwards. Not only designed in interior façade that opens out to the 088-488 398/019-362 1833 a South-West and North-East orientation 50-ft wide Festive Street Retail, a street www.mahsing.com.my/SuteraAvenue to consider the tropical weather, the mall concept which will offer chic al N5º 58.220’ E 116º 04.025’ Meridin@Medini also offers a facilities fresco dining, fashion boutiques and deck on level 5 that includes wading, entertainment outlets. swimming and Jacuzzi pools, playground, thematic landscaped garden, gymnasium, A landmark 10-storey shop office block, fitness par course, yoga deck, BBQ terrace, contemporary serviced apartments and multipurpose hall, a business centre a trendy boutique hotel blends business equipped with Wi-Fi and launderette. and leisure pursuits with seamless ease. The sales gallery in KK Times Square was The architectural language of the project opened in December 2012, and to date, features mainly clean lines with a stable nearly 90% of the shop offices have been base tapering up to an elegant tip, taken up. The 2-storey retail lots recently creating an iconic curved façade which opened for sale has also seen strong will be very distinctive due to the proposed interest. height of the towers (36 storeys). This designed has created quite a buzz in Iskandar.

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SUSTAINABILITY REPORT

OUR MISSION Mah Sing Group is:

• To become the most respected and highly diversified Group fully committed to continuous enhancement of our core businesses

• Committed to developing our people through effective human resource strategies that are closely aligned to the Group’s business strategies. Our staff are innovative, creative, competent and above all loyal to the Group

• Providing our customers with excellent quality products at competitive cost, prompt delivery and flexible service through our uncompromising commitment towards total customer satisfaction. Our shareholders are assured of maximum returns on their investments and we will continually play a major role in community development

In line with Mah Sing’s Mission, the Board of Directors promotes PROPERTY DIVISION sustainability in the conduct of the Group’s businesses. The Group continues to work on ever-improving designs, Sustainability efforts and initiatives are embedded in the day- layouts and green features and will continue to build eco- to-day operational activities or are organized via special sensitive and environmentally friendly property developments programs for specific sustainability cause. By achieving a so that homebuyers can enjoy life in harmony with nature. satisfactory balance on bottom-line growth, welfare safeguard of people and community within a harmonious state of the Green Products environment, such efforts are intended to benefit the shareholders/ investors, operating environment, society, The Group has identified a few development projects in the employees, customers, business partners, contractors, suppliers Klang Valley and Penang Island for green certification and other stakeholders. benchmarked against green compliance standards recognized by the World Green Building Council. Those green compliance This Sustainability Report (“SR”) provides a brief write-up on the standards included Malaysia’s Pertubuhan Arkitek (“PAM”) Group’s sustainability efforts and initiatives. Green Building Index (“GBI”), Singapore’s Building and Construction Authority (“BCA”) Green Mark; or United States’ A. ENVIRONMENT Green Building Council (“USGBC”) Leadership in Energy and Environmental Design (“LEED”). The Group reaches out to the environment via its support towards various environmental initiatives. Where possible, the These green building rating systems provide comprehensive Group incorporates green features in its property products and framework for assessing environmental impact and promotes environmentally friendly processes in producing performance in various categories such as energy efficiency, plastics products. water efficiency, environmental protection, indoor environmental quality and innovation credits.

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Amongst the key green features that have been captured during the project design & planning stage are:- MESSAGES

• Use of solar photovoltaic panels, energy efficient air-conditioning system and lifts/escalators • Lighting power density reduction through selection of highly efficient T5 and LED fittings • Motion sensors for common areas by switching on lighting only when traffic is present • Use of high performance glazing and roof insulation to reduce the heat gain through building

envelope and eventually reduce Air Conditioning Mechanical Ventilation (ACMV) usage ACTIVITIES • Naturally ventilated and day-lit car park/common areas such as lift lobbies, corridors and staircases to reduce need for electrical lighting thus energy consumption • Reflective cool paint on external wall to reduce cooling load requirement OENNEFINANCIALS GOVERNANCE

• Rain water harvesting system to reduce potable water usage for landscape irrigation • Drip irrigation system to minimise water consumed for irrigation needs • Rain water harvesting tank to collect rainwater for irrigation • Selection of drought tolerant plants to reduce irrigation demand • Water efficient sanitary fittings to reduce water consumption • Provision of sub-meters for irrigation, swimming pool, water features, rainwater harvesting tank and fire-fighting system to enable early water leakage detection

• Use of recycled content materials with green labels • Extensive greenery, roof garden to reduce urban heat island effect • Use of organic compost in lieu of synthetic fertilizers • Adoption of Construction Quality Assessment System (“CONQUAS”) to ensure excellence in construction and workmanship • Sustainability efforts led by Green Building specialists INFORMATION • Provision of recycling facilities allowing residents to participate in sustainable efforts ADDITIONAL

• Use of low Volatile Organic Compounds (“VOC”) paints at appropriate internal wall surfaces to maintain good indoor air quality • Use of Carbon Monoxide (“CO”) sensors to regulate car park exhaust system • Natural ventilation and day lighting in dwelling units and common areas

• Locating refuse chutes outside dwelling units in a natural ventilated space to enhance indoor air quality NOTICES

• Covered walkway to public transport station, pneumatic waste conveyancing system to appropriate projects • Provision of sheltered bicycle racks • Use of siphonic rainwater drainage system to improve water drainage from roofs FORM OF

• Redevelopment from brownfield/ existing sites PROXY • Provision of eco-pond to promote a self-sustainable ecological system • Provision of compost bins to manage horticultural waste MAH SING GROUP BERHAD ANNUAL REPORT 2012 40

SUSTAINABILITY REPORT

Green Compliance

The Group continues to monitor green compliance at every stage of development process to achieving the targeted green certification in the various components.

For the green projects, professional Green Building Consultants had been engaged as early as the concept formulation stage to assist the project design team in ensuring compliance with the respective green guidelines and certification standards.

Criteria for selection and evaluation of contractors during contract award stage includes track record in good environmental site management. Waste and site management targets are set for contractors who are required to comply with all green building requirements on site.

Environmental friendly and sustainable construction practices are adopted during construction to reduce polluting effects. Environmental Management Plan (“EMP”) is prepared for each project site based on the recommendations in the Environmental Impact Assessment (“EIA”) so as to comply with the authority’s environmental requirements. The EMP will address the major construction activities associated with the proposed projects that have the potential to be a source of environmental impacts.

During handover, relevant user manuals documenting environmental friendly facilities and features will be distributed to property owners for their information and as a guide to sustain the intended environmental performance during occupancy.

Post-occupancy monitoring and maintenance will be initiated to verify the actual efficiencies achieved against target ratings within 12 months of practical completion of properties or upon more than 50% occupancy.

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SUSTAINABILITY REPORT MESSAGES

Green Certification

For projects registered for green Southbay Plaza, Penang Island and Icon assessment, pre-assessment will be Residence Mont’ Kiara, Klang Valley are conducted by Green Building Consultant now BCA’s Green Mark certified projects to the Green Certifier. During concept upon their receipt of provisional briefing, all necessary data including certifications during their construction

current achievement/target for those stage in 2012. ACTIVITIES developments will be presented to Green Certifier so as to achieve the most Southbay Plaza was awarded with the potential and practical green features for Green Mark (Gold) Provisional Certificate the developments. and Icon Residence Mont’ Kiara was awarded with the Green Mark (Certified) Certification level will then progress to Provisional Certificate after assessment actual assessment upon documents of documents by BCA of Singapore. submission. If successful, provisional OENNEFINANCIALS GOVERNANCE certification will be awarded. Both projects which are targeting for PAM’s GBI Certified level are now in Final certification will be issued upon progress of collecting documents for verification of green features by Green final assessment. Assessor at project completion stage. The certification process will only be completed upon final assessment of development projects within 12 months of practical completion of properties or upon more than 50% occupancy. INFORMATION ADDITIONAL

Artist’s impression of Southbay Plaza

1. Project registered for assessment 2. Pre - assessment 3. Provisional certification upon actual assessment 4. Final certification upon

final assessment NOTICES

Figure 2: Green certification process FORM OF

Artist’s impression of Icon Residence Mont’ Kiara PROXY

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SUSTAINABILITY REPORT

Ferringhi Residence in Penang Island was identified in 2012 for green certification, targeting for BCA’s Green Mark Gold. Design is still at the preliminary stage, targeting for BCA’s Green Mark assessments in 2013.

Icon Residence Penang which was identified for green certification during design & planning stage in 2011 is pending building plan approval. The project is registered for BCA’s Green Mark (Gold) assessment and PAM’s GBI (Certified) assessment in 2013.

Green Practices Artist’s impression of M-City Artist’s impression of Icon City Recycling bins are located at gated & M-City project at Jalan Ampang, Kuala In its pre-assessment stage of the green guarded precincts in Sri Pulai Perdana 1 & Lumpur was conferred by The Malaysian certification process, Icon City at Petaling 2 and Austin Perdana, Johor Bahru Reserve Editors Choice Property Awards Jaya, Klang Valley is pending for value whereby recycled items will be collected 2012 as the Most Iconic Green engineering confirmation as a measurement and sold by a charitable organization for Development. The project embraces for cost effective building design. orphanage homes. After handed over to environmental sustainability and excellence the residents, the Residents’ Association towards globally-recognized green building If awarded, Icon City project will be has continued with the initiative for the standards of BCA’s Green Mark (Certified) envisaged as a world within a world, betterment of the environment. and PAM’s GBI (Certified). offering unparalleled convenience and the integration of every lifestyle desire. M-City project stands out in terms of both This project is poised to be one of the iconic design and green features with its first mixed development in Southeast multi-level thematic hanging gardens Asia to achieve triple-certifications under such as Sky Garden at Level 23 & 35 and PAM’s GBI, BCA’s Green Mark and Tropical Sanctuary at Level 29. Also USGBC’s LEED for various certification deemed as contributing to the iconic criteria such as:- LEED New Construction, status of M-City is the four-tiered private LEED Core and Shell, Green Mark resident clubhouse, Altitude Sky Club on Residential Building, GBI Residential New Levels 23-26. Construction, GBI Non-residential New Construction.

One of recycling bins located at gated & guarded precinct in Johor Bahru.

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SUSTAINABILITY REPORT MESSAGES

PLASTICS DIVISION

ISO 14001:2004 Environmental Management System Certified

The Group’s plastics division manufactures a wide range of its own brand of proprietary products that are growing in popularity due to its economical, ergonomical and environmentally friendly benefits. Plastics pallets which can be reused and recycled compared to more conventional wood-based alternatives are being promoted not just locally but overseas through participation at conferences and exhibitions. ACTIVITIES OENNEFINANCIALS GOVERNANCE

Australia Fine Food Exhibition at the Melbourne Exhibition and Convention Centre from 10 to 13 September 2012. INFORMATION ADDITIONAL The Management is committed to optimizing environmental Asia Petrochemical Industry Conference Exhibition (“APIC”) at Kuala performance throughout the manufacturing processes. Lumpur Convention Centre (“KLCC”) on 17 & 18 May 2012. Appreciating the environmental benefits of conserving resources, both the Malaysian and Indonesian operations have constantly seeked alternative options such as strategic investments in plant and technology to help deliver energy- efficient improvement and reduced impacts from the operations The division is also a significant player in the Original Equipment and manufacturing processes wherever practical. In-line with Manufacturer (“OEM”) markets. The Malaysian plant focuses in this philosophy, the plastics division has invested into a total of electronic & electrical (“E&E”) products and the Indonesian 20 units of new injection moulding machines with energy saving NOTICES facility supplies parts and components mainly for the features as well as sound reducing (low noise). These new automotive industries. energy-efficient injection machines which came into operation since year 2008 could reduce electricity consumption by an Besides complying with all applicable environmental legislation average of 25% as compared to the traditional hydraulic and statutory regulations pertaining to the preservation and machines. Analysis performed on electricity consumption by all protection of the environment, the Group’s plastics division, the existing machines including those machines with energy both the Malaysian and Indonesian operations strive to go saving features showed a lower quantity of power required beyond and have achieved the ISO 14001:2004 international of 0.16kw/tonnage output in 2012 as compared to certification since 2007 in managing environmental impact. 0.19kw/tonnage output in 2007. FORM OF PROXY

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SUSTAINABILITY REPORT

GROUP WIDE ENVIRONMENTAL OUTREACH EFFORTS

The Group promotes the awareness of greener environment To create greater environmental awareness, and as a show of by continuing with its environmental outreach efforts to support towards the plastics industry’s commitment towards inculcate a culture of preserving the environment in the 3Rs (“Reduce-Reuse-Recycle”), the plastics division participated workplace. in the “Larian Jom Kitar Semula“ organized by the Malaysian Plastics Manufacturer Association (“MPMA”) at Putrajaya on Essential Electrical and Electronic Equipment 17 November 2012.

The Group’s employees are constantly reminded and This event was held in conjunction with the National Recycle encouraged to conserve energy consumption. These include:- Day 2012 by Solid Waste Management & Public Cleansing Corporation, Ministry of Housing & Local Government. • Turning off lightings, air-conditioning and other essential electrical equipment during lunch breaks and absences. • Split-unit air-conditioning system that allows prudent use of electricity as usage can be controlled and confined to specific work area and time. • Use of LCD monitors as well as reduction in the number of servers via virtualisation to reduce energy consumption.

Reduce, Reuse & Recycle

The Group’s employees are strongly encouraged to reduce, reuse and recycle paper usage in their daily operation. Amongst the initiatives taken thus far include:-

• Use of shared-drive and centralised system for document and resource management.

• Abridged version of annual report together with CD-ROM. Full version will be given only upon shareholders’ request. Mah Sing team in support of MPMA “Larian Jom Kitar • Practice of double-sided printing, recycle used paper for Semula”. in-house photocopying and printing.

• Arrangement of waste recycling by allocating recycling bins for paper, plastics and other materials at Mah Sing HQ.

MPMA participants holding the “Don’t be a litterbug” banner.

Practice of recycle used paper for in-house Recycling bins for paper, plastics and other materials photocopying and printing at Mah Sing HQ. at Mah Sing HQ.

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SUSTAINABILITY REPORT MESSAGES

Other Initiatives

• The Group has been participating in the annual Earth Hour, a global initiative by World Wide Fund for Nature (“WWF”). The Group’s HQ participated in the turning off of non- essential lights for an hour on Earth Hour day. The Group also displayed the Earth Hour banner on its website days prior to the actual day. Residents and tenants of Mah Sing’s ACTIVITIES properties were also encouraged to do the same.

Earth Hour banner on www.mahsing.com.my

B. COMMUNITY OENNEFINANCIALS GOVERNANCE The Group firmly believes in giving back to the community. Through Mah Sing Foundation and its programs; certain community outreach initiatives surrounding its development projects; and other CSR activities, the Group had gone beyond just the structures that it builds but benefitting the greater communities that live within and around them.

CSR via MAH SING FOUNDATION

Mah Sing Foundation through which Corporate Social Responsibility activities of the Group are conducted is the brainchild of the Group Managing Director/ Group Chief Executive, Tan Sri Dato’ Sri Leong Hoy Kum who believes that a consolidated effort in CSR will be more effective and impactful in benefiting the needy.

Established in the year 2005, the Foundation is an approved tax-exempted charitable organization. All donations made to the Foundation by any corporation or individual will be tax exempted.

Objective of Mah Sing Foundation

The Foundation is a charitable trust established by Mah Sing Group Berhad to receive and administer funds solely for medical, educational and charitable purposes. It also seeks to raise more funds via annual fund raising activities and events. INFORMATION ADDITIONAL CSR Activities of Mah Sing Foundation

Since its inception in 2005 and till early May 2013, the Foundation has made charitable cash contributions exceeding RM4 million to the less fortunate amongst us, both in Malaysia and abroad, for opportunities to improve their quality of life. Mah Sing is active not only in the social and cultural development of our local community but has also been concerned with communities abroad. In this regard our contributions in the past years included the Somalia Humanitarian Aid and aiding the Japanese people who were affected by earthquake and tsunami, channeled through the Japan Red Cross via the Tabung Bencana Pandu-Puteri-Maybank.

Year 2012 was another eventful year for Mah Sing Foundation. As with the past 7 years, various activities were organized that included monetary assistance & relief schemes for the poor and distress; education assistance in the form of subsidies and NOTICES donations to schools; and medical assistance to those who are medically ill. Support was also given to social and sports activities, especially those that help to promote national unity. FORM OF PROXY

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SUSTAINABILITY REPORT

Month Recipients/ Activities Category of Assistance

March Yayasan Sin Chew in conjunction with its charity shows organized to raise Underprivileged fund for the construction of a retirement home for senior citizens, namely The Harmony Home in Semenyih, Selangor.

April Tabung Projek Jiwa Murni for building of a shelter at the assembly area and Education floor refurbishment in classrooms of Sekolah Kebangsaan Leftenant Adnan, Kajang, Selangor.

June 15 charitable organizations that benefitted from Mah Sing Foundation’s Education, medical .fundraising event “An Unforgettable Night of Sharing”. & underprivileged

July Yayasan Nanyang Press (China Press) for the family of Ms Ngeo Jia Yee in Medical support of her cancer treatment related expenses.

August Buddhist Tzu-Chi Merits Society Malaysia in conjunction with its charity Medical & education concert to raise funds for the to-be constructed dialysis centre and education centre. Medical An employee of the Group in aid of surgery expenses incurred for his daughter.

Xin Shuo Group Sdn Bhd for sponsoring fundraising event “Beijing Voice of Underprivileged Disability Charity Show”

September National Stroke Association of Malaysia (“NASAM”) in conjunction with the Medical Star Publications’s Penang Starwalk 2012. Funds received went towards helping stroke survivors recover from the debilitating effects of stroke and to raise awareness of stroke and stroke prevention. . Tabung Rayuan Hari Pahlawan for sponsorship of pin bunga raya during Underprivileged Warrior’s Day Appeal 2012 in aid of Angkatan Tentera Malaysia veterans.

Real Estate & Housing Developers’ Association (“REHDA”) Malaysia in Underprivileged conjunction with REHDA Youth’s charity initiative in aid of selected children orphanages.

November Newspaper-in-Education (“NiE”) school sponsorship program by the Star Education Publications which aim to improve the proficiency of the English language amongst students in Chinese primary schools.

Chong Hwa Independent High School, Kuala Lumpur. Education

Yayasan Bakti Khidmat Masyarakat Malaysia (“YBKMM”) Cancer Care Fund. Medical

December Dignity for Children Foundation, Kuala Lumpur. Education

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SUSTAINABILITY REPORT MESSAGES

Mah Sing Foundation’s Fundraising Event “An Unforgettable Night of Sharing”

On 15 June 2012, Mah Sing Foundation organized its inaugural fundraising event. The fundraising event which was themed

“An Unforgettable Night of Sharing” ACTIVITIES featured a line up of local and international artistes who performed for an audience of over 600.

This event was not only a chance for Mah Sing Foundation to continue its CSR deeds, but also provided an opportunity for its corporate and business partners to OENNEFINANCIALS GOVERNANCE take part and support its inaugural fundraising event.

On the night of the fundraising, Mah Sing Foundation successfully raised slightly more than RM2.8 million in donation from Mah Sing Group Berhad, its corporate and business partners as well as personal contribution by the Group Managing Director/ Group Chief Executive. Group Managing Director/Group Chief Executive Tan Sri Dato’ Sri Leong Hoy Kum presenting a mock cheque The monies collected will be disbursed in to Mah Sing Foundation’s Chairman, Yang Berbahagia Dato’ Syed Norulzaman Bin Kamarulzaman at the accordance with objectives of the fundraising event. Foundation. On the night of the event, fifteen (15) deserving organizations with either national or regional initiatives and which are registered non- governmental and non-profit outfits with the Social Department of Malaysia benefitted from INFORMATION

the fundraising event. The charitable ADDITIONAL organizations included Persatuan Kanak-Kanak Istimewa Kajang, Selangor, JJ Lions Dialysis Centre, Persatuan Peniaga-Peniaga Cacat Selangor, Persatuan Orang Cacat Johor Bahru, Persatuan Pembantuan Kristian Malaysia (“Malaysian Care”), Malaysian Association for the Blind (“MAB”), Pertubuhan Membantu Pesakit Parah Miskin Malaysia, Development of Human Resources for Rural Areas, Malaysia, Persatuan

Kebajikan Shan De Johor Bahru, Persatuan Pusat NOTICES Kebajikan Insan Malaysia, Persatuan Kebajikan HOPE Worldwide Kuala Lumpur, National Council of Senior Citizens Organisations Malaysia, Pink Ribbon Wellness (L) Foundation, Chong Hwa Independent High School, Kuala Lumpur and Sekolah Jenis Kebangsaan (Cina) Wangsa Maju. Charitable organizations posed for group photos after mock cheque presentation at the fundraising event FORM OF PROXY

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SUSTAINABILITY REPORT

Contribution to Fundraising Event “Beijing Voice of Disability Charity Show”

Mah Sing Foundation was honored to be the Main Sponsor of the Beijing Voice of Disability Charity Show which was held in Kuala Lumpur on 19 October 2012. The Foundation’s donation in the amount of RM137,500 brought a group of renowned disabled artistes from Beijing, China to present cultural performances here, which the Foundation hopes will inspire the physically challenged in Malaysia and China through the unique performing arts of the disabled whilst improving the working relationship of the two countries via cultural exchange. Proceeds from the show were channeled to charity organizations for the disable both in Malaysia and China, working towards helping those with physical disabilities and supporting them to access the care services they need.

Mah SIng Foundation’s Chairman, Yang Berbahagia Dato’ Syed Norulzaman Bin Kamarulzaman presented the pre-event mock cheque to the event organizer of the Beijing Voice of Disability Charity Show.

Education Aid to Chong Hwa Independent High School, Kuala Lumpur

Mah Sing Foundation continues its noble endeavour to contribute to nation-building with its donation of RM230,000 towards the development fund of Chong Hwa Independent High School in November 2012. All donations will be utilised by the school to build an indoor sports complex.

Education Aid to Dignity for Children Foundation (“Dignity”), Kuala Lumpur

Mah Sing Foundation’s 12-month CSR project from November 2012 to October 2013 with Dignity was established to provide financial aid in support of two (2) of their projects which are Primary Education Program and Faisal Cup 2013. A total of RM140,663.32 were disbursed as at early May 2013.

Dignity is a teaching facility with a mission to break the cycle of poverty through quality education and care from Montessori preschool to secondary level for children of the urban poor and underprivileged. Currently, Dignity is a large facility with approximately 700 students and 60 teachers including administrative staff. In addition, Dignity also supports 74 other learning centres for refugees across the Klang Valley through their teachers’ training and development. The donation was utilized by the school management towards the Primary Education Program’s building rental, salaries of teachers, stationery, food, transportation, books and teaching materials.

Faisal Cup being the first and only football and netball tournament of its kind in Malaysia, acts as a voice of freedom and opportunity for underprivileged children. 600 children will benefit from the Faisal Cup and sport program which runs during the weekend beginning July 2013 to November 2013. Funding will be utilised for training/ practice’s field rental, transportation, meals, first aids and football referees.

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SUSTAINABILITY REPORT MESSAGES

COMMUNITY OUTREACH INITIATIVES SURROUNDING DEVELOPMENT PROJECTS

Mah Sing uses its expertise and resources to undertake • Supplying labour, equipment and machinery to lay premix community development activities that would not only improve at car park area of the apartment Pangsapuri SS8 opposite the well-being of community but also to foster a good and the Icon City project. harmonious relationship with the local community. ACTIVITIES During the year, various community development activities were carried out across the Group’s development projects:-

• After several drowning incidents, more than 5,000 residents of Desa Mentari low-cost flats at Taman Desa Mentari, Petaling Jaya finally had their wish fulfilled with proper fencing built around monsoon drain beside a playground in the area. When the Group was first told OENNEFINANCIALS GOVERNANCE about the plea, the Company responded to the problem without delay as a community service such as this can help save lives. To improve on faulty design and safety aspects of the fencing, Mah Sing spent some RM30,000 to install new metal rails to fill the gaps in the fence and a new lock to keep the gates closed at all times.

Pothole patching work in progress and completed at car area of Pangsapuri SS8

• Adjoining to the Icon City project is an Indian temple (“Kuil Sri Sakthi Easwari”). One unit of passenger lift facility was constructed at the “Sri Sakthi Easwari Wedding Hall” for the New metal rails being put on paint. convenience of especially the elderly devotees when there are functions held at the temple. INFORMATION ADDITIONAL • A token of contribution was extended to Persatuan Penganut Sri Maha Muniswarar for their annual festive celebration at the “Kuil Sri Maha Muniswarar Swamy” in Rawang.

• In Penang, a RM1.65 million was spent to shift and upgrade a Chinese temple. A donation of RM80,000 was also New lock that will keep contributed for the construction of road leading to the the gate closed at all time. main entrance of the temple. NOTICES

Monsoon drain at the Desa Mentari low-cost flats is now all fenced up with the newly

installed steel FORM OF bariccades. PROXY

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SUSTAINABILITY REPORT

OTHER CSR ACTIVITIES CUSTOMER RELATIONSHIP MANAGEMENT (“CRM”) AND LOCAL COMMUNITY EVENTS • Since 2008, the plastics division had sponsored students from lower income families for technical apprentice course Mah Sing recognizes the need to engage and reach out to its in plastics injection moulding. Employment service shall customers and to promote community living amongst the continue for qualified students after completion of the house owners. apprentice course including a 1-year contract service. Periodically, the Group’s CRM team organizes community In November 2012, a total of 10 students from lower events at residential areas as value-adding services to Mah Sing income families were sponsored for 2-year technical project’s communities and locals. apprentice course in plastics injection moulding through “Skim Perantis PIMAS”. Home Improvement Roadshow @ Perdana Residence 2, Selayang (22 & 23 September 2012) @ Kinrara Residence, Kinrara (14 July 2012)

CRM brought home improvement roadshows for the benefit of new property owners at Kinrara Residence and Perdana Residence 2. The roadshows involved a wide range of exhibition on home improvement products and services by participating merchants of Mah Sing’s M CLUB Loyalty Program and M CARE Property Support Services. Through CRM events such as this, Mah Sing hopes to better serve its customers.

Products and services exhibited were interior design services, wallpaper, curtain & fabric, home decor, gardening services, telecommunication services, real estate agencies, kitchen appliances, tinted film, build-in cabinet, home services, solar heater, timber flooring and wardrobe.

Owners and their families had the opportunity to know more of the home products and services while enjoying the promotion offered by the participating merchants. Kids’ colouring and drawing corner was also available to keep the little ones occupied.

Trainee is given on-job training at production floor

• In support of Yayasan Bursa Malaysia, the Community Foundation of Bursa Malaysia where funds will benefit selected charitable organisations all over the country, the Group has contributed RM18,000 to Bursa Malaysia’s RAT Race 2012, a run jointly organized by The Edge and Bursa Malaysia to raise fund for charity.

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SUSTAINABILITY REPORT MESSAGES

Mah Sing Kids Drawing Contest “My House, My Paradise” Gotong Royong @ closing date at end of May 2012 @ Hijauan Residence, Cheras (7 April 2012)

Mah Sing’s CRM team organized an exciting Kids Drawing On 7 April 2012, the residents of Hijauan Residence gathered Contest via the Mah Sing Community Website where for a Gotong-Royong community program. participation was opened to Mah Sing’s communities. Children between the ages of 6 - 9 years old and 10 - 13 years old were The program which was a joint effort with the local authority, required to submit their artwork in line with the theme of the Majlis Perbandaran Kajang (MPKj), was organized by Mah Sing ACTIVITIES contest - “My House, My Paradise”. as part of its customer relationship building effort to promote the well-being of the community at Hijauan Residence. After much deliberation from the panel of judges since many excellent works of art were submitted, Master Leem Jia Zhen, The residents, from all walks of life, demonstrated great 10 years old, from Hijauan Residence, Cheras won the grand enthusiasm in a variety of activities which included cleaning of prize of AEON shopping voucher worth RM120. Congratulations common areas and drain and rejuvenation and beautification of to Master Leem and his family. Whilst to the rest of the the Residence’s park. participants, thank you for the time, effort and hard work that OENNEFINANCIALS GOVERNANCE went into your submissions of artwork. INFORMATION ADDITIONAL NOTICES

Master Leem’s winning FORM OF artwork PROXY

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C. WORKPLACE

Human Capital Management

The Group believes that an effective workforce is essential to • In line with Mah Sing’s vision and efforts towards the success of an organization. Initiatives have been taken to transformation, the Company embarked on a series of manage employee training needs and well-being in line with the teambuilding programs in 2012. These highly interactive organization’s strategic direction. programs were designed to facilitate team members to a unique process for team development and performance in Learning & Development a positive working culture and environment. The Company- wide initiative involved a total of 515 employees, including Trainings in 2012 focused and targeted towards developing senior management, which was carried out through a total competencies, skills and knowledge of Mah Sing’s employees. of 11 sessions in Port Dickson, Negeri Sembilan. The Technical and soft skill training programs were introduced and programs incorporated key learning points on leadership, conducted in-house and externally. communication, teamwork and group synergy with the aims to promote and strengthen teamwork amongst all • Some of the new training programs introduced in 2012 staff; to heighten level of communication, trust, respect were customized towards specific departmental needs and commitment amongst staff; to align staff towards the such as:- Company’s Vision of becoming a world class regional - “Microsoft Project 2010” and “Gemba Kaizen for property developer. Improvements” (Project Department); - “Achieving Breakthrough Service” (Sales & Marketing Department); - “iOS mobile Development” (IT Department); - “Customer Service – The Way Forward” (Sales & Marketing, Project and Customer Care Departments).

• A talk entitled “The Quality Evolution – Big Q vs. Small Q” was attended by the Senior Management team of Mah Sing.

The talk “The Quality Evolution - Big Q vs Small Q” in session

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SUSTAINABILITY REPORT MESSAGES

Staff Recognition & Welfare

• Mah Sing Property made a factory visit to Mah Sing Plastics To motivate employees towards better performance through to learn safety, 5S and Kaizen practices at the division; it greater dedication and loyalty, Mah Sing has in place was also to promote interaction amongst staff from performance review process whereby deserving employees are different divisions. rewarded with competitive basic remuneration packages, annual increment, bonus incentives, or the grant of the Group’s

employee share options (“ESOS”). For better working ACTIVITIES environment, work space and facilities are continuously refurbished and upgraded.

Long service awards were conferred to employees during the Group’s annual dinners as a show of appreciation for their loyalty and contribution.

Long Service Award Presentation during FINANCIALS GOVERNANCE Mah SIng 2012 Annual Dinner

• Trainings at Mah Sing Plastics covered various topics:-

- A talk on SOCSO’s duties and responsibility, types of claim and reimbursement procedures was organized for all department heads, executive level and selected staffs.

- 4 technical staffs attended a talent development program “Advanced Scientific Moulding Certification” at the German-Malaysian Institute. The program which was organised by the Malaysian Plastics Manufacturer Association (“MPMA”) was designed to develop higher INFORMATION

skills workers. Work-Life Balance ADDITIONAL

- 24 executive level staffs from each department The Group organised get-together activities that bring everyone attended an in-house training “Supervisory & closer together, to develop team spirit, healthy lifestyle and Leadership Skills” conducted by an external trainer. promote social interactive among staff. Training topics cover effective time management, effective communication, people handling, self- motivation and right attitudes. NOTICES

Mah Sing team in high spirit at the Edge-Bursa Malaysia Kuala Lumpur Rat Race 2012 FORM OF

Group in discussion PROXY

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Workplace Diversity

The Group recognizes that diversity in workforce provides opportunities for creative solutions and allows the Group to become more responsive in today’s global and dynamic business environment. A healthy mix of employees, regardless of gender, professional level or age group, promotes productivity that has enabled the Group to sustain a healthy growth in the industries that it operates in:-

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SUSTAINABILITY REPORT MESSAGES

Health & Safety

The Group places high emphasis on Regular tool-box meetings on safety procedures are conducted health and safety at workplace and aims at construction site for staff and site workers. Relevant to achieve excellence in occupational personnel are also sent for safety trainings on chemical spillage safety, health and environment at handling, use of fire extinguisher and first aid knowledge. Fire workplace. The Group is also committed drills are conducted regularly to prepare for any fire to inculcate a sense of awareness emergencies and to ensure that all fire prevention systems such ACTIVITIES amongst its employees and to accept as alarms, lift and escalator, fire extinguishers, sprinklers, smoke responsibilities in occupational safety, and heat detectors are in proper working order. health and environmental matters. Much emphasis is also placed on maintaining a clean, safe and With (i) prevention of accident, (ii) orderly working environment. During the year, initiatives such prevention & mitigation of occupational as gotong-royong to clean up the main walkway from the gate illnesses and (iii) prevention of entrance to the main office and factory drainage system were environmental pollutions as objectives, also organized at the plastics factory. OENNEFINANCIALS GOVERNANCE the Group has in place a Safety, Health and Environment Policy Statement. The management and employees are jointly committed to:

(i) Comply with provisions of all existing laws including Occupational Safety & Health Act 1994, Factories & Machinery Act 1967 and its regulations, relevant codes of practice and guidelines (ii) Provide information, training and Gotong-royong to clean drainage system facilities to all parties including at the plastics factory. employees and contractors (iii) Increase awareness and establish accountability by employees and contractors on safety, health and environmental matters INFORMATION

(iv) Continuously monitor and regularly As for office buildings, safety measures in place include security ADDITIONAL review the performance of safety, guards and surveillance equipment at relevant work locations; health and environment proper lighting at high risk areas such as car park and staircase. NOTICES FORM OF PROXY

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D. CUSTOMERS

With a Vision to become a world class regional property developer, Mah Sing does not merely build homes, but living spaces that are complete with parks, clubhouses and other lifestyle facilities. Mah Sing aims to earn the loyalty of its customers and strongly believes in good after-sales services, which it is always working to improve on.

Customer Care Product Quality

The Group goes the extra mile for customers by offering value- High on the Group’s priority list is to provide its customers with added services like M CARE and M CLUB in addition to the excellent quality products. In ensuring uncompromising dedicated team of customer service staff and e-customer commitment towards total customer satisfaction, both the service system that is put in place to enable more effective property and plastics divisions are ISO 9001:2008 Quality management of recording, filtering, tracking and analysis of Management System certified. The property division has also customer complaints and feedback. adopted the Construction Quality Assessment System (“CONQUAS”) standards for both residential and commercial development projects. M CARE Property Support Services Property Division M CARE Property Support Services (“M CARE”) which was introduced in year 2011 continues to be the one-stop The property division’s commitment to quality and reliability in professional service in all facets of property ownership and delivery has made it one of the leading property developers in management provided for Mah Sing’s property owners. Malaysia. The overwhelming response the Group receives at its Consultation services range from pre-sales to after-sales such project previews and launches shows the confidence buyers as general legal and mortgage matters, liaising with have in what it offers in terms of the ability to conceptualize, professionals for property inspection and maintenance, design and deliver quality products with unique and innovative assisting in sourcing for tenants/secondary buyers, as well as concepts on a timely basis in good locations and its rental collection, relocation, renovation, monthly property commendable sales services. maintenance, concierge and butler services. Over the past 18 years, Mah Sing has received over 90 local and international awards for its corporate performance, branding M CLUB Loyalty Rewards Programme and projects, including The Edge’s Top Property Developers Awards. These serve as a good gauge for buyers selecting The M CLUB Loyalty Rewards Programme is a distinctive property developers. programme specially created for direct purchasers of Mah Sing properties to enjoy privileges and benefits such as buyer repeat As testament to its commitment, the Group is recognized in the purchase discounts, buyer-get-buyer rewards and birthday industry for its excellence in many aspects:- surprises. Other secondary benefits including discounts and freebies at well-known lifestyle and retail merchants across the • The BrandLaureate Award 2012-2013 – “Best Property Klang Valley are also part of the program. Company” • The Edge’s “Top Property Developers Award 2012 – Listed To-date, privileges and benefits have been Top 10” enhanced with over 70 lifestyle brands offering • Euromoney Real Estate Awards 2012 – “Best Industrial discounts and freebies for home improvement, Property Award” health & beauty, dining, vacation and shopping. • Overseas Property Professional (OPP) Awards for Up-to-date information are provided to M CLUB Excellence 2012 – “Gold Award for Best Use of Social members, merchants and the general public via Media”, “Silver Award for Best Luxury Developer Mah Sing Community Website at Worldwide” www.mahsingcommunity.com.my. The website • The Malaysian Reserve Editors Choice Property Awards has also helped promote a charity live show 2012 “Most Iconic Green Development” – M-City entitled “A Laugh for Charity” by REHDA YOUTH • Asia Pacific Property Awards – “Best Leisure Development to M CLUB community. – Legenda @Southbay” • Putra Brand Awards – “Property Development”

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SUSTAINABILITY REPORT MESSAGES

Since the very first CONQUAS-assessed project in 2009, namely As recognition for its excellence in operation and The Icon Tun Razak, Mah Sing now has many of its development manufacturing practices, the plastics division in Malaysia has projects in the Klang Valley, Penang and Johor that are assessed garnered various awards from Samsung Electronics (M) Sdn. by the Building and Construction Authority (“BCA”) of Bhd. for fulfilling the quality requirements and acquired stable Singapore’s CONQUAS on the architectural stage. Structural quality assurance system and process enabling to produce assessment on the related development projects was uniform products through self quality assurance activities:- performed in-house by the consultants.

• “Best Vendor for the months of June, August and ACTIVITIES Mah Sing’s contractors of those CONQUAS-assessed projects December 2012” are required to comply with CONQUAS requirements, allowing • “Best Supplier Quality for the month of August 2012” Mah Sing to set targets on the desired standard and quality of • “Best Quality Performance for 3 consecutive months in the its developments. As a measure of product quality, more than Year 2012” 80% of the CONQUAS-assessed projects are above 70 points, • “Best Vendor of the Year 2012” both architectural and structural scoring combined.

Plastics Division E. CONTRACTORS/ SUPPLIERS OENNEFINANCIALS GOVERNANCE

The Group’s plastics division demonstrated its continual Evaluation and selection of contractors/ suppliers are based on commitment to ensuring the highest standards in the product formal competitive bidding procedures. Periodical assessments delivery processes and systems towards meeting customers’ are done through the annual contractor performance satisfaction with PT Mah Sing’s accreditation of ISO/TS evaluation and compliance audits according to ISO quality 16949:2009 “Quality Management Systems – Particulars objectives. requirements for the application of ISO 9001:2008 for automotive production and relevant service part organisations” With efficient management of contractors/ suppliers, Mah Sing in June 2012. endeavors to ensure the most reliable delivery of its products and at the same time compliance with all requirements with respect to safety, health and environment.

The procurement process is carried out by the Group’s in-house procurement function together with expertise from various functions of the business units with the aim to support the Group’s objectives in terms of pricing (via economies of scale), quality (reliable source), availability (choice) and timely delivery (efficiency). The procurement process of the Group is managed INFORMATION

to ensure that purchased materials or services meet the ADDITIONAL requirements of the customers and specifications of the contract. This process will also allow continuous monitoring and identification of new resources at best value in terms of cost and quality through strategic sourcing and purchasing.

The procurement process of the Group covers areas such as identification and selection of suitable sources of materials and order processes, requests for tenders and quotations, evaluation and selection of sub-contractors/ suppliers based on

established criteria, periodical assessments and updates of NOTICES approved suppliers lists. This will continue to establish a wider network of suppliers, manufacturers, dealers and agents which The ISO/TS 16949: represents good value for money and also providing valuable 2009 Certificate information to the Group.

The introduction of e-trading system in the procurement process has also become significant as it enables the procurement to employ technology to enhance the process,

improve staff efficiency and productivity. FORM OF PROXY

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F. SHAREHOLDERS

Corporate Governance Investors

Mah Sing is committed to ensuring the highest standards of Mah Sing continues to reward its investors with sustainable corporate governance in the areas of board effectiveness, returns as evidenced by its strong revenue and net profits relationship with shareholders and investors, accountability and growth. Return on equity has consistently been above 10% and audit. dividend payout ratio has consistently been above its policy of minimum 40% since 2006. Set out on pages 64 to 75 of this Annual Report is the Corporate Governance Statement detailing the Group’s corporate As testament to the Group Managing Director/ Group Chief governance practices. Executive’s leadership and dedication in charting the Group on its consistent strong performance and track record, the Group As testimony of the Group’s commitment to good governance, Managing Director/ Group Chief Executive was honoured by the responsible management and communication to shareholders, Hong Kong-based magazine – 8th Corporate Governance Asia the Group is proud to receive during the year:- for “Best Asian Corporate Director Award 2012”; 3rd Asia Excellence Recognition Awards 2013 for “Asia’s Best CEO (i) National Annual Corporate Report Awards (“NACRA”) 2012 (Investor Relations) – Malaysia”; Global Leadership Awards 2013 – “Certificate of Merit for the Annual Report 2011” for “Lifetime Achievement Award” and SME Recognition for (ii) Hong Kong-based magazine – Corporate Governance Asia “Platinum Entrepreneur Award”. - “The Best of Asia Recognition Award 2012” - “Asia Excellence Recognition Awards 2013 – Best Investor Relations by Company (Malaysia)” OUR ONGOING COMMITMENT - “Asia Excellence Recognition Awards 2013 – Best Investor Relations Website/ Promotion” In 2012, we believe we have charted a satisfactory level in our efforts of promoting sustainability in the businesses that we do.

Moving forward, the Group is committed to and will continue to improve on its sustainability efforts and initiatives to achieve even higher standards of sustainability.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 MAH SING GROUP BERHAD ANNUAL REPORT 2012 60

CALENDAR OF EVENTS

8 January Pre-Chinese New Year Celebration

2012 with Balloon Sculpture Display & Photo Corner, Red Packet Art Work Workshop & Chinese Calligraphy. January

In February, Iparc3@Bukit Jelutong was named Best Industrial Project at the Asia Pacific Property Awards 2012

5 February

Chap Goh Meh Celebration with Feng Shui Consultation, Balloon Sculpture Display & Photo Corner, Apprearance of God of Fortune, Lion Dance Performance, Dragon Dance The unveiling of the Shanghai office was Performance, China Yoyo Performance, Chinese Orchestra also done in February Performance & Game Stalls. February March 18 February Mah Sing 18 March Movieganza Annual Dinner 2012

School Holiday Event. The event included activities such as Balloon Sculpture Display & Photo Corner, Inflatable Game, DIY Mug design workshop & Family Challenges Game.

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CALENDAR OF EVENTS MESSAGES

At the Asia Pacific Property Awards in At the Asia Pacific Property Awards in April March, we won • Best High Rise Architecture (5 Stars) for Icon Residence, Mont’ Kiara, ACTIVITIES • Best Office Development (Highly Commended), • Best Commercial Redevelopment Sport Car Show Event with Mazda RX7 & (5 Stars) for Icon City, Petaling Jaya RX8 car show & “My Dream Car” Drawing • Best High Rise Architecture Asia contest for visitors to participate. Pacific for Icon Mont Kiara 22 April OENNEFINANCIALS GOVERNANCE May

The BrandLaureate Conglomerate Awards 27 MayMother’s Day Celebration Event. Activities on this event such as Balloon Sculpture Mr Hong Hock Seng of Mah Sing (3rd from left) accepting the Display & Photo corner, Kids Singing Contest BrandLaureate 2012-2013 - Best Property Company (Masters “Song For Parents” & manicure Treatment Category) from DYMM Sultanah Hjh. Kalsom binti Abdullah, INFORMATION

for Mother’s Only. Sultanah of Pahang (centre) ADDITIONAL

15 June NOTICES

Mah Sing celebrated its 18th Anniversary in We celebrated with over 20 NGOs and Non-Profit Groups at June Grand fashion at Shangri-La KL in June Mah Sing Foundation’s An Unforgettable Night of Sharing Gala in June 2012 FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 62

CALENDAR OF EVENTS July

15 July Sport & Health Day Event with activities such as Paintball Target Shooting Challenge, Family Portrait with Sport Frame Design, Soccer Fun Match Game, In July, Sutera Avenue, Kota Kinabalu’s Sales Gallery opened Sport Wii Challenge & Free Health Check its doors at KK Times Square for visitors & purchasers.

Meanwhile in August, we went on a Hangzhou Road Show that generated awareness & interest in the China market.

12 August Sierra Perdana Community Event with Making Bubur Lambuk, Raya Cultural Giant Board Game & Handicraft Corner August “Batik Painting Kit”. September 9 September

Selamat Hari Raya. Satay, Ice Kacang & Buffet Lunch Served. That month also saw us retaining our position as one of the Top 10 Property Developers at The Edge Property Excellence Awards 2012. 23 September Mid-Autumn Festival. Moon Cake + Chinese Tea, In September, M Residence@Rawang opened Satay & Buffet Lunch Served. its’ Show Gallery to members of the public.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CALENDAR OF EVENTS MESSAGES ACTIVITIES

21 October Mini Event with Balloon Sculpture Workshop & Games. Mah Sing has an Auditorium in Wisma REHDA named after her in October. October FINANCIALS GOVERNANCE In October, Mah Sing signed a Lease Purchase Agreement (LPA) with Iskandar Investment Berhad (IIB) and announced the development of The Meridin@Medini.

November 18 November

Property Talk @ Sierra Perdana. Property Talk by INFORMATION Mr. Samuel Tan & Others activities such as ADDITIONAL Handicraft Corner “ Ceramic House Coin Bank” for Visitors.

We also signed a Smart Collaboration with Taiwan Realty, one of Taiwan’s top 3 property groups. December

16 December NOTICES

Capping off a busy year, Tan Sri Dato’ Sri Leong Hoy Kum was named the Platinum Entrepreneur of the Year by SME Malaysia in December. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 64

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Mah Sing Group Berhad believes that good corporate governance practices are of high importance to the long-term strategic objective and short-term goals of Mah Sing Group.

The Board is committed to ensure the highest standard of corporate governance practices is observed throughout the Group, and in discharging its Board responsibilities.

The Group continuously observes the latest applicable Malaysian Code on Corporate Governance (“MCCG”) as required under Bursa Malaysia Securities Berhad’s (“Bursa Securities”) Main Market Listing Requirements (“Main Market LR”). For the financial year ended 31 December 2012, the Group has studied in detailed the broad Principles as set out in the MCCG 2012, and certain Recommendations stated under each Principle and the latest Main Market LR amendments (“CG Amendments”) issued on 29 November 2012, having regard to the Group’s structure, business environment and industry practices.

The Group noted the staggered effective dates of CG Amendments, and will report in next annual report the adoption progress and compliance status.

In line with the Recommendation 7.2 stated under Principle 7 of the MCCG 2012, a new Corporate Responsibility (“CR”) Section was created on the Company’s website. This Corporate Governance Statement together with other relevant information are accessible from the CR Section of the Company’s website at www.mahsing.com.my.

As testimony of the Group’s commitment to good governance, the Group is proud to receive the following awards and recognitions:-

• National Annual Corporate Report Awards (“NACRA”) 2012 – “Certificate of Merit for the Annual Report 2011” • Hong Kong-based magazine – Corporate Governance Asia - “The Best of Asia Recognition Award 2012” - “Asia Excellence Recognition Awards 2013 – Best Investor Relations by Company (Malaysia)” - “Asia Excellence Recognition Awards 2013 – Best Investor Relations Website/ Promotion”

A. BOARD OF DIRECTORS

1. BOARD CHARTER

The Board Charter sets out the composition, roles and responsibilities and processes of the Board. It provides an overview of how the Board leads by strategic guidance and effective oversight of management. It also sets out the delegation of authority by the Board to various committees to ensure the Board members in performing their responsibilities on behalf of the Group would act in the best interests of all stakeholders.

Outline of key features of the Board Charter are available for reference in the CR Section of the Company’s website at www.mahsing.com.my:-

(i) Board structure (ii) Roles and responsibilities (iii) Relationship with shareholders and investors (iv) Access to information and independent advice

2. BOARD BALANCE

The Board comprises seven (7) members of whom four (4) are Non-Executive Directors. Amongst the Non-Executive Directors, three (3) are Independent Non-Executive Directors including the Chairman. This fulfills the prescribed requirement for one-third (1/3) of the Board to be independent as stated in the Main Market LR of Bursa Securities. Profiles of the Directors are provided on pages 6 to 9 of this Annual Report.

The Board considers that its present composition constitutes an optimal size for the Group’s current business profile, and is appropriate for effectively leading the Group on its future business growth thrust.

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CORPORATE GOVERNANCE STATEMENT MESSAGES

Although all the Directors have equal responsibilities for the Group’s operations, the roles of the Independent Non-Executive Directors are particularly important in bringing independent judgement and ensuring all issues proposed by the executive management are fully discussed and examined to take into account the long term interests, not only of the shareholders, but also of other stakeholders such as the employees, customers and business associates.

The Board holds the view that the ability of an Independent Director to exercise independence is not a function of his length of service as an independent director. The suitability and ability of an Independent Director to carry out his roles and responsibilities effectively are very much a function of his caliber, qualifications, experience and personal qualities. With their in-depth knowledge ACTIVITIES of the Group’s business operations and activities, the Independent Non-Executive Directors can continue to provide check and balance, bring independent judgement and contribute objectively to the Group’s conduct of business despite their length of service with the Group. The Board values such skills and other qualities of the Independent Non-Executive Directors and based on Nomination Committee’s recommendation, the Board has concluded that the three (3) Independent Non-Executive Directors, who have served the Board for more than nine (9) years, continue to serve the Board as Independent Non-Executive Directors.

In order to ensure continual effective supervision and accountability of the Board and management, there is a clear distinction and division of responsibilities between the Independent Non-Executive Chairman and the Group Managing Director / Group Chief GOVERNANCE Executive, which is regularly reviewed to meet changing circumstances.

The Chairman acts independently in the best interest of Mah Sing and is responsible for ensuring Board effectiveness and standard of conduct while the management of the Group’s businesses and implementation of policies and day-to-day running of the business are led by the Group Managing Director / Group Chief Executive and Executive Directors.

Any concerns and queries relating to the Group may be addressed to Jen. Tan Sri Yaacob Bin Mat Zain (R), the Senior Independent Non-Executive Director who is also the Chairman at email: [email protected]. FINANCIALS 3. ROLES AND RESPONSIBILITIES OF THE BOARD

The Board leads the corporate strategy and directions of the Group, and oversees proper conduct of the Group’s businesses. The Directors, in discharging their fiduciary and leadership functions individually and collectively bring to the Board the relevant skills, business experience, insights and professional judgment as follows:-

• Objectively reviewing, adopting and monitoring the implementation of the Group’s strategic plan as proposed by the Management. INFORMATION ADDITIONAL The Board discharges its role in leading the corporate strategy and directions of the Group, satisfying itself the management has continued to drive business growth that is in alignment with Mah Sing’s Vision & Mission. The strategic plan also promotes sustainability, ie. achieving a satisfactory balance on bottom-line growth, safeguarding the welfare of people and community within a harmonious state of the environment.

• Overseeing the conduct of the Group’s business to ensure it is being properly managed.

Overseeing and evaluating corporate behavior and conduct of business of the Group, a Code of Conduct as included in page 73 of this Annual Report provides guidance to employees on acceptable and unacceptable behaviours. NOTICES • Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures to achieve a proper balance between risks incurred and potential returns to the shareholders.

A statement featuring the Group’s risk management framework and internal control system is included in pages 80 to 82 of this Annual Report. FORM OF PROXY

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CORPORATE GOVERNANCE STATEMENT

• Ensuring there is orderly succession of senior management positions of sufficient caliber.

Nomination Committee and Remuneration Committee were delegated by the Board to review succession plans and remuneration packages for the Directors.

Further details on Nomination and Remuneration Committees are as set out on pages 67 to 69 of this Annual Report.

The Board also ensures there are appropriate policies for training, appointment and performance monitoring of management positions.

• Overseeing the development and implementation of shareholder communications policy.

The main features of the Company’s shareholder communication process and procedure is described on pages 71 to 72 of this Annual Report.

• Reviewing the adequacy and the effectiveness of the management information and internal controls system.

The Group’s Internal Audit function which serves as a means of obtaining sufficient assurance of regular review of the adequacy and effectiveness of the internal control system of the Group is described more fully in the Statement of Internal Audit Function on page 79 of this Annual Report.

4. BOARD MEETINGS

The Board conducts at least four (4) meetings annually, with additional meetings convened as necessary depending on business requirement. During the financial year ended 31 December 2012, four (4) Board meetings were held.

The attendance of each Director at the Board meetings is as tabulated below:-

Name of Directors Total Meetings Percentage of Attended Attendance (%) JEN. TAN SRI YAACOB BIN MAT ZAIN (R) 4/4 100 TAN SRI DATO’ SRI LEONG HOY KUM 4/4 100 DATO’ STEVEN NG POH SENG 4/4 100 LIM KIU HOCK 3/4 75 LEONG YUET MEI 3/4 75 CAPTAIN IZAHAM BIN ABD. RANI (R) 4/4 100 LOH KOK LEONG 4/4 100

All the Directors have complied with the minimum 50% attendance requirement in respect of Board meetings as stipulated by the Main Market LR of Bursa Securities.

Besides these Board meetings, the Board also exercises control on matters that require its approval by way of circular resolutions and informal meetings. Proceedings of the relevant meetings and the resolutions reached have been properly recorded and duly minuted.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CORPORATE GOVERNANCE STATEMENT MESSAGES

5. SUPPLY OF INFORMATION

Board papers with sufficient notice are distributed to Directors before Board meetings so that Directors have sufficient time to better understand specific matters requiring Board’s deliberation at the meetings.

During Board meetings, the Non-Executive Directors are briefed on, amongst others, major operational, financial and corporate issues, activities and performance of projects, divisional performance, business outlook, major acquisition and disposal of assets including investments and changes in the requirements of regulatory bodies. The Directors are also notified of any corporate ACTIVITIES announcements released to Bursa Securities. They are also notified of the prescribed requirements in dealing with the securities of the Company during closed periods as stated in the Main Market LR of Bursa Securities.

The Chairman of the Audit Committee would inform the Directors at Board meetings, of any salient matters noted by the Audit Committee and which require the Board’s attention or direction.

All Directors have access to the advice and services of the qualified Company Secretaries and senior management. GOVERNANCE The Directors, whether as a full Board or in their individual capacity have access to all information within the Group and may seek independent professional advice, where necessary, in the furtherance of their duties and they may do so at the Group’s cost.

6. BOARD COMMITTEES

To assist the Board in the discharge of its oversight function, the Board has delegated specific responsibilities to four (4) Board committees which include the Audit Committee, Nomination Committee, Remuneration Committee and Option Committee. These Committees have the authority to examine particular issues within their terms of reference and report back to the Board with

their recommendations. The ultimate responsibility for the final decision on all matters, however, rests with the entire Board. FINANCIALS

Audit Committee

The composition, terms of reference and summary of activities of the Audit Committee are set out separately in the Audit Committee Report on pages 76 to 79 of this Annual Report. INFORMATION

Nomination Committee ADDITIONAL

Composition

Two (2) out of three (3) of the Nomination Committee members, including the Chairman, are independent Non-Executive Directors.

Members

The members of the Nomination Committee are:-

JEN. TAN SRI YAACOB BIN MAT ZAIN (R) NOTICES Chairman (Independent Non-Executive)

LEONG YUET MEI Director (Non-Independent Non-Executive)

CAPTAIN IZAHAM BIN ABD. RANI (R) Director (Independent Non-Executive) FORM OF PROXY

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CORPORATE GOVERNANCE STATEMENT

Terms of Reference of Nomination Committee:

• to consider, in making its recommendation to the Board, candidates for all directorships/ Board committees, in respect of their character, skills, knowledge, expertise, experience, professionalism, integrity and time commitment; and in the case of Independent Non-Executive Directors, their abilities to discharge such responsibilities/ functions as expected from an Independent Non-Executive Director;

• to assist the Board in reviewing on an annual basis the required mix of skills, experience and other qualities of the Directors of the Board/ Board Committees;

• to review the Board’s succession plan, in recommending the appropriate board balance (including gender diversity) and size of non-executive participation;

• to facilitate Board’s induction and training programs in areas which Directors could improve on; and

• to facilitate annual assessment of the effectiveness of the Board as a whole, the performance and contribution of each individual Director and Board Committee member including Independent Non-Executive Directors as well as the Group Chief Executive.

During the financial year, the Nomination Committee assessed & evaluated and was satisfied with the effectiveness of the Board/ Board Committees. The assessment and evaluation is properly documented.

Remuneration Committee

Composition

Two (2) out of three (3) of the Remuneration Committee members consist of Non-Executive Directors.

Members

The members of the Remuneration Committee are:-

JEN. TAN SRI YAACOB BIN MAT ZAIN (R) Chairman (Independent Non-Executive)

TAN SRI DATO’ SRI LEONG HOY KUM Group Managing Director / Group Chief Executive

LEONG YUET MEI Director (Non-Independent Non-Executive)

Terms of Reference of Remuneration Committee:

• to study and periodically review remuneration packages of all Executive Directors; and

• to make recommendations to the Board on all elements of remuneration and terms of employment for Executive Directors.

In the case of Non-Executive Directors, the determination of their remuneration is a matter for the Board as a whole and the level of remuneration reflects the experience and level of responsibilities undertaken by each Non-Executive Director.

Individual Directors do not participate in the decisions regarding their individual remuneration.

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CORPORATE GOVERNANCE STATEMENT MESSAGES

The Level and Make-up of Remuneration

The remuneration of Executive Directors are so determined to ensure that the compensation and benefits commensurate with the level of the Directors’ responsibilities, as well as taking into consideration the Group’s performance relative to the industry. Survey data on the remuneration practices of comparable companies are taken into consideration in determining the remuneration package. The objectives of the Remuneration Committee in determining the levels and components of the compensation packages are to motivate, attract and retain dedicated Directors that are key to the success of the Group. ACTIVITIES Disclosure on Directors’ Remuneration

The details of Directors’ remuneration for the financial year ended 31 December 2012 are as follows:-

The number of Directors with total remuneration falling into the following different bands:-

Remuneration Band(RM) Number of Executive Directors Number of Non-Executive Directors

Up to 50,000 3 GOVERNANCE 50,001 to 100,000 1 1,600,001 to 1,650,000 1 2,550,001 to 2,600,000 1 11,250,001 to 11,300,000 1 Total 3 4

The aggregate remuneration of the Directors categorized into appropriate components:- FINANCIALS

Fees Salaries Bonus EPF Benefits- Total 2012 Total 2011 in-kind Remuneration Remuneration (RM) (RM) (RM) (RM) (RM) (RM) (RM) Executive - 4,686,000 10,691,000 1,209,060 98,949 16,685,009 13,220,483 Directors Non-Executive 150,000 - - - 24,600 174,600 165,512

Directors INFORMATION ADDITIONAL Total 150,000 4,686,000 10,691,000 1,209,060 123,549 16,859,609 13,385,995

Option Committee

The Option Committee was established to administer the implementation of the Employees’ Share Option Scheme (“ESOS”) and is vested with such powers and duties as are conferred upon it by the Board and the By-Laws of the ESOS. In addition, the Option Committee may, for the purpose of administering the ESOS, make rules and regulations or impose terms and conditions which the Option Committee may in its discretion consider to be necessary or desirable for giving full effects to the ESOS. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 70

CORPORATE GOVERNANCE STATEMENT

Members

The members of the Option Committee are:-

JEN. TAN SRI YAACOB BIN MAT ZAIN (R) Chairman (Independent Non-Executive)

TAN SRI DATO’ SRI LEONG HOY KUM Group Managing Director / Group Chief Executive

LOH KOK LEONG Director (Independent Non-Executive)

7. APPOINTMENTS AND RE-ELECTION OF DIRECTORS TO THE BOARD

During the financial year, there was no new appointment of Director to the Board.

Appointments of Director to the Board shall be made and carried out based on the recommendation of the Nomination Committee. Amongst the criteria used in the selection process is a Director’s time and his/ her availability to serve the Board. With this, the Board will obtain time commitment from a Director at the time of appointment. Additionally, before accepting any new directorship outside the Group, all Board members shall notify the Chairman of the Board indicating the amount of time that will be spent on the new appointment.

In accordance with the Company’s Articles of Association, at least one-third (1/3) of the Directors shall retire from office every year provided always that all Directors shall retire from office at least once in every three (3) years but shall be eligible for re- election at the Annual General Meeting (“AGM”). No Director stays in office for more than three (3) years without being subject to re-election by shareholders.

Directors who are above the age of seventy (70) are statutorily required to seek re-appointment at each AGM in accordance with Section 129(2) of the Companies Act, 1965.

8. DIRECTORS’ TRAINING

All the Directors have attended the Mandatory Accreditation Program prescribed by Bursa Securities.

The Group acknowledges the fact that continuous education is vital for the Board to gain insight into the state of the economy, changing commercial risks, technological advances in our core businesses, latest regulatory requirements and management strategies. As such, the Directors are updated from time to time on relevant laws & regulations, key developments in Companies Act 1965, Bursa Securities’ Main Market LR, Malaysian Code on Corporate Governance as well as business and industry specific trends.

When necessary, Directors will also attend relevant trainings, either by recommendation of the Nomination Committee based on its annual performance assessment findings on the training and development needs of Directors or Directors’ own professional bodies required training hours. Such updates and trainings shall enable Directors to equip themselves with the relevant knowledge to discharge their responsibilities and duties more effectively.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CORPORATE GOVERNANCE STATEMENT MESSAGES

During the financial year ended 31 December 2012, seminars/ workshops/ talks of various subject matters attended by Directors include:-

- Budget 2013 Seminar - Germany-Malaysia Security Dialogue - Limited Liability Partnership - Myanmar Roundtable 2012: “Understanding the Changes, Realising the Opportunities”

- New Transfer Pricing Rules and APA Rules ACTIVITIES - National Tax Conference 2012 - “Politics Decoded – Implications on Financial Markets” - “Rebuilding Trust in the Financial Sector” - The Financial Institution Directors’ Education (“FIDE”) Elective Programs: Corporate Finance, Private Equity, Media Skills Program - The Transfer Pricing Seminar 2012 GOVERNANCE B. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS

Dialogue with Shareholders and Investors

The Board recognises and values the importance of effective and clear communication to its shareholders as well as to potential investors and the public. It is fully committed to ensuring the highest standards of transparency and accountability in the disclosure of pertinent information relating to the Group.

In this respect, the Group, through its Corporate Communications and Investor Relations departments and its active investor

relations (“IR”) programme, engages with research analysts, fund managers, shareholders, financiers and media to convey the FINANCIALS Group’s strategies, performance, products and major developments. The forms of engagements include briefing sessions and site visits as well as participation in non-deal investment road shows, one-on-one meetings and press conferences with the media. The Group’s top management which includes the Group Managing Director/ Group Chief Executive and/ or Executive Directors also takes an active role in engaging our stakeholders through their participation in the IR programme.

During the financial year, the Company met close to 280 members of the investment community.

Other effective channels of communication employed by the Group includes making timely and informative disclosures in interim INFORMATION and full year financial results announcements, Annual Report and other announcements to Bursa Securities on relevant transactions ADDITIONAL undertaken by the Group.

The Board believes that timely releases of financial information and updates on other developments are important to enable shareholders and the general public to receive information on the performance and prospects of the Group on a regular basis. Shareholders, investors and members of the public are able to access such announcements on Bursa Securities’ website at www.bursamalaysia.com and other information via the Company’s website at www.mahsing.com.my. The summary of interim results is also published in at least one (1) national newspaper.

Shareholders, investors and members of the public may also forward their queries to the Company by contacting its dedicated IR team at Tel: 603-9221 8888, Fax: 603-9222 1288, Email: [email protected]. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 72

CORPORATE GOVERNANCE STATEMENT

General Meetings

The Company’s general meeting is the principal forum for dialogue with shareholders as it provides shareholders with an opportunity to seek clarification on the Group’s business strategy, performance and major developments.

The notice of last annual general meeting (“AGM”) and the annual report were sent to the shareholders earlier than the minimum notice period of 21 days before the date of the AGM. Such notice contained sufficient information and explanatory notes regarding the effect of the proposed resolutions in respect of special businesses to enable the shareholders to decide whether to attend the AGM and to make informed decisions.

The shareholders shall have right to attend or appoint proxies to attend, speak and vote including to demand for a poll on the motions contained in the notices of general meetings in accordance with the provisions of the Articles of Association of the Company.

For the benefit of all shareholders who were present at the AGM, the Directors presented the Company’s responses to the issues raised by the Minority Shareholder Watchdog Group at the start of the AGM. At each general meeting in 2012, a presentation is given in relation to the progress and financial performance of the Group, or proposals for which the approvals of shareholders are being sought.

Board members, senior management, the Group’s external auditors and the Company’s advisers where relevant were available to respond to shareholders’ queries during the general meetings. The shareholders present at the general meetings were given sufficient time and opportunity to participate in the questions and answers sessions with regard to the proposed resolutions, the Group’s financial performance and operations in general and other concerns on the Group.

After the general meetings, press conferences were conducted to provide the members of the media with opportunities to receive information relating thereto about the Group. Disclosures made to shareholders, investors and media are handled within the prescribed disclosure requirements under the Main Market LR of Bursa Securities and is guided by Corporate Disclosure Guide issued by Bursa Securities.

C. ACCOUNTABILITY AND AUDIT

Financial Reporting

In presenting the annual audited financial statements and quarterly announcements of unaudited consolidated financial results to shareholders, the Board has taken reasonable steps to ensure a balanced and understandable assessment of the Group’s financial position and prospects. The Board is assisted by the Audit Committee in overseeing the Group’s financial reporting processes and the quality of its financial reporting.

Internal Control

The Directors’ Statement on the Group’s Risk Management and Internal Control, which has been reviewed by the External Auditors, provides an overview of the risk position and state of internal controls within the Group.

The Statement on Risk Management and Internal Control is set out on pages 80 to 82 of this Annual Report.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CORPORATE GOVERNANCE STATEMENT MESSAGES

Code of Conduct

To promote productivity and efficiency, and help ensure a pleasant, safe, cooperative and productive work environment, the Group has a Code of Conduct that is included in Employee Handbook and freely accessible on the Group’s shared folder in emailing system. The Code of Conduct lists down examples of unacceptable conduct or performance in areas such as Indiscipline; Attendance and Punctuality; Use of Property; and Personal Actions and Appearance.

Employees also have free access to the Executive Directors and may raise concerns of non-compliance to them or through the ACTIVITIES Human Capital Management Department. Employees may also report observed non-compliance of conduct to Jen. Tan Sri Yaacob Bin Mat Zain (R), the Independent Non-Executive Director who is also the Audit Committee Chairman at email: [email protected].

Relationship with Auditors

The Group maintains a transparent relationship with the External Auditors in seeking professional advice towards ensuring GOVERNANCE compliance with accounting standards. The Group Internal Auditors are present at all Audit Committee meetings and the External Auditors are invited to participate at all the Audit Committee meetings.

In 2012, the Audit Committee held two (2) informal discussion sessions with both the internal and external auditors without the presence of the executive members of the Board and other employees.

The duties of Audit Committee relating to external audit are described on page 77 of this Annual Report.

D. DIRECTORS’ RESPONSIBILITY STATEMENT FINANCIALS

The Board is responsible for ensuring the financial statements of the Group and of the Company are drawn up in accordance with the provisions of the Companies Act, 1965, and the applicable approved Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company at the end of the financial year and of the financial performance and cash flows of the Group and of the Company for the financial year.

The Board of Directors is satisfied that in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the Group has adopted the appropriate accounting policies and applied them consistently; and INFORMATION that all applicable approved accounting standards have been followed. ADDITIONAL

E. ADDITIONAL COMPLIANCE INFORMATION

Options, Warrants or Convertible Securities

Other than ESOS, the Company did not issue any convertible securities during the financial year.

Details of ESOS movement during the financial year are as disclosed in Note 24 on pages 148 to 149 of the financial statements.

Non-Executive Directors are not granted ESOS whilst ESOS granted to the Executive Directors and Chief Executive are detailed in NOTICES Directors’ Report on page 88 of the financial statements. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 74

CORPORATE GOVERNANCE STATEMENT

The aggregate maximum and actual percentage of ESOS allocation to Directors and Senior Management during the financial year and since commencement of the ESOS is as follows:-

Financial Year 2012 Since ESOS commencement Maximum Maximum Allocation Actual Allocation Actual Applicable Allocation Applicable Allocation %%%% Executive Directors and 6 6 33 39 Senior Management

Subsequent to the financial year end, the Company completed the listing and quotation of Renounceable Rights Issue with Warrants on 22 March 2013, as detailed in Note 43 on page 176 of the financial statements.

Sanctions and/or Penalties

There were no sanctions and/ or penalties imposed on the Company, its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year ended 31 December 2012 which have material impact on the operations or financial position of the Group.

Non-audit Fees Paid/Payable

For the financial year ended 31 December 2012, the amount of non-audit fees paid/ payable to the External Auditors and their affiliates amounted to RM128,000.

Material Contracts Involving Directors’ and Major Shareholders’ Interests

There were no material contracts entered into by the Group involving Directors’ and major shareholders’ interests which were still subsisting as at the end of the financial year under review or which were entered into since the end of the previous financial year.

Recurrent Related Party Transactions

The existing shareholders’ mandate for the Group to enter into recurrent related party transactions of revenue or trading nature (“Shareholders’ Mandate”) which is necessary for its day-to-day operations shall expire at the conclusion of the forthcoming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

The aggregate value of transactions conducted pursuant to the Shareholders’ Mandate during the financial year is as disclosed in Note 42 on page 174 of the financial statements.

Share Buybacks

The existing authority for Mah Sing to purchase up to 10% of its issued and paid-up share capital shall expire at the conclusion of the forthcoming Annual General Meeting and is subject to renewal by the shareholders at the said Annual General Meeting.

During the financial year, there were no share buybacks by the Company.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CORPORATE GOVERNANCE STATEMENT MESSAGES

Status of Utilization of Proceeds Raised from Corporate Exercises

The net proceeds raised by the Company from the Rights Issue with Warrants completed in March 2013 amounting to RM397,741,720 is utilised as follows:-

Approved Actual Balance utilization utilization unutilized

as at as at ACTIVITIES 6 May 2013 6 May 2013 RM’000 RM’000 RM’000 Property development expenditure and future 350,000 25,795 324,205 land acquisitions General working capital 42,742 12,274 30,468 Estimated expenses in relation to the exercise 5,000 3,840 1,160

Total 397,742 41,909 355,833 GOVERNANCE FINANCIALS INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 76

AUDIT COMMITTEE REPORT

COMPOSITION

The Audit Committee comprises three (3) members, all of whom are Independent Non-Executive Directors. One (1) of the Audit Committee members, Mr. Loh Kok Leong is an accountant by profession and a member of the Malaysian Institute of Accountants as disclosed in Directors’ Profile on pages 6 to 9 of this Annual Report.

The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board of Directors (“the Board”) at least once every three (3) years to determine whether the Audit Committee and members have carried out their duties in accordance to their terms of reference.

During the financial year, the Audit Committee convened four (4) meetings which were attended by the members as tabulated below:-

Name of Members Attendance at Meetings JEN. TAN SRI YAACOB BIN MAT ZAIN (R) 4/4 (Chairman, Independent Non-Executive Director)

CAPTAIN IZAHAM BIN ABD. RANI (R) 4/4 (Independent Non-Executive Director)

LOH KOK LEONG 4/4 (Independent Non-Executive Director)

The Group Internal Auditors and External Auditors attended all the meetings.

In 2012, the Audit Committee held two (2) informal discussion sessions with both the internal and external auditors without the presence of the executive members of the Board and other employees.

TERMS OF REFERENCE

MEETINGS AND MINUTES

In assisting the Board to effectively discharge its fiduciary responsibilities for corporate governance, timely & accurate financial reporting and development of sound internal control, Audit Committee meetings which shall be held not less than four (4) times a year will be attended by an Executive Director, representatives from management team and the Group Internal Auditors. The External Auditors are invited to participate at all the Audit Committee meetings.

The Chairman of the Audit Committee would engage on a continuous basis with senior management such as the Group Managing Director/ Group Chief Executive and the Executive Directors in order to be kept informed of matters affecting the Group. Attendance of other Directors and employees at any particular Audit Committee meeting will be at the invitation of the Audit Committee.

A quorum shall consist of two (2) members and the majority of the members present must be Independent Directors.

The Company Secretary shall be the Secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, supported by explanatory documentation to the Audit Committee members prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee and circulating them to the Audit Committee members and to the other members of the Board. The Chairman of the Audit Committee shall report on key issues discussed at each meeting to the Board.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

AUDIT COMMITTEE REPORT MESSAGES

AUTHORITY

The Audit Committee is authorized by the Board to investigate any activity within its terms of reference and shall have unrestricted access to both the Internal and External Auditors and to all employees of the Group. The Audit Committee is also authorized by the Board to obtain external legal or other independent professional advice as necessary.

The Audit Committee is also authorized to convene meeting with the External Auditors and Internal Auditors separately, at least two (2) times a year without the presence of the executive members of the Board and other employees in order to have unfettered ACTIVITIES access to information that it may require.

DUTIES

The duties of the Audit Committee shall be:-

Oversee all matters relating to external audit: GOVERNANCE

• discuss with the External Auditors where necessary, the nature and scope of the audit and ensure co-ordination of audit where more than one audit firm is involved; • discuss problems and reservations arising from the interim and final audits and any matter the auditors may wish to discuss; • review with the External Auditors, their evaluation of the system of internal controls, their management letter and management’s response; • consider the nomination & appointment of the External Auditors as well as the appropriateness of their audit fees as recommended by the management; to commensurate with their experience & resources (both firm and person assigned), firm’s audit engagements, number & experience of supervisory & professional staff assigned, size & complexity of company

being audited; FINANCIALS • assess the suitability and independence of External Auditors in respect of the provision of non-audit services to the Group and the Company and in accordance with the terms of all relevant professional and regulatory requirements; • consider any letter of resignation of External Auditors and any questions of resignation and dismissal; and • review the level of assistance given by the employees of the Group to the External Auditors.

Review of systems of internal controls and risk management:

To review the reports by the Chairman of the respective Risk Management Teams in relation to the adequacy and integrity of the INFORMATION

Group’s internal control systems in mitigating significant risks. ADDITIONAL

Oversee all matters relating to internal audit:

• to 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; • to review and approve the internal audit plan; • to ensure co-ordination of external audit with internal audit; • to consider major findings of internal audit reviews and management’s response and ensure that appropriate actions are taken on the recommendations of the internal audit function;

• to review any assessment of the performance of the staff of the internal audit function; NOTICES • to approve any appointment or termination of senior staff members of the internal audit function; and • to keep itself informed of resignations of internal audit staff members and provide resigning staff member an opportunity to submit his/ her reasons for resigning. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 78

AUDIT COMMITTEE REPORT

Review of financial statements:

To review the quarterly and year-end financial statements of the Group before submission to the Board, focusing particularly on:-

• any changes in accounting policies and practices; • significant audit issues and adjustments arising from audit; • going concern assumption; • compliance with the applicable approved accounting standards and regulatory requirements; and • compliance with the Main Market Listing Requirements (“Main Market LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and other legal requirements.

Additional duties and responsibilities:

• to consider any related party transactions and conflict of interest situation that may arise within the Group or the Company including any transaction, procedure or course of conduct that raises questions of management integrity. They are also required to ensure that the Directors report related party transactions annually to shareholders via the Annual Report; • where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main Market LR of Bursa Securities, the Audit Committee must promptly report such matter to Bursa Securities; and • to carry out such other responsibilities, functions or assignments as may be defined jointly by the Audit Committee and the Board from time to time.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE FOR THE FINANCIAL YEAR

During the financial year, the Audit Committee carried out its duties as set out in the terms of reference and discussed the following issues:-

• reviewed the extent of the Group’s compliance with the provisions set out under the Malaysian Code on Corporate Governance for the purpose of preparing the Corporate Governance Statement and the Statement on Risk Management and Internal Control pursuant to the Main Market LR of Bursa Securities; • reviewed the Risk Management Teams’ reports on the risk profile of the Group and the adequacy and integrity of internal control systems to manage these risks; • reviewed with the External Auditors the audit plan and to ensure co-ordination of audit of the various companies within the Group with different External Auditors; • reviewed with the External Auditors any significant findings in relation to audits; • considered and recommended to the Board for approval of the audit fees payable to the External Auditors; • reviewed the internal audit plan and internal audit reports and considered the major findings of internal audit reviews and management’s response; • reviewed and discussed the internal audit function, its authorities, resources and scope of work; • reviewed related party transactions entered into by the Group (if any) and the draft proposal to seek shareholders’ mandate pursuant to Paragraph 10.09 of the Main Market LR of Bursa Securities to authorize the Group to enter into recurrent related party transactions of a revenue or trading nature; • reviewed quarterly financial results and year end financial statements of the Group before recommending them to the Board for their approval for announcement to Bursa Securities; and • had two (2) sessions of discussions with the Group Internal Auditors together with External Auditors without the presence of the executive members of the Board and other employees.

STATEMENT ON EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) BY THE COMMITTEE

The Audit Committee has reviewed and verified that the allocation of options granted during the financial year under the ESOS of the Company was in accordance with the criteria for allocation of options pursuant to the ESOS.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

AUDIT COMMITTEE REPORT MESSAGES

STATEMENT ON INTERNAL AUDIT FUNCTION

INTERNAL AUDIT FUNCTION

The Internal Audit (“IA”) function is considered an integral part of the assurance framework within the Group. IA function plays an intermediary role in that it assists in the discharge of the oversight function which is delegated by the Board to the Audit

Committee. It serves as a means of obtaining sufficient assurance of regular review and/ or appraisal of the adequacy and ACTIVITIES effectiveness of the risk, control and governance framework of the Group.

The Group’s IA function is undertaken by the Group Internal Audit Department (“IAD”) which reports to the Audit Committee.

The Group IAD undertakes independent, regular and systematic reviews of the systems of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. The annual internal audit plans which are designed to cover development projects and entities across all levels of operations within the Group are approved by the Audit Committee. The Group IAD adopts a risk-based approach in planning the audit assignments taking into consideration industry GOVERNANCE specific requirements.

The Group IAD performs independent evaluation of the operation of the Enterprise Risk Management Framework focusing primarily on the adequacy and effectiveness of the said framework.

The Group IAD also assists the Audit Committee in reviewing the extent of the Group’s compliance with the provisions set out under the Malaysian Code on Corporate Governance for the purpose of preparing the Corporate Governance Statement, the Audit Committee Report and the Statement on Risk Management and Internal Control pursuant to the Main Market LR of Bursa Securities and the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. FINANCIALS

SUMMARY OF INTERNAL AUDIT ACTIVITIES FOR THE FINANCIAL YEAR

During the financial year, various independent audit reviews on the appropriateness of the instituted controls and evaluation of the acceptable level of principal risk exposures were conducted in relation to the Group’s operations and information systems as follows:-

• reliability of financial and operational information; INFORMATION

• effectiveness and efficiency of operations; ADDITIONAL • safeguarding of assets; and • compliance with policies, procedures, laws & regulations and contracts.

At the conclusion of the various audits, weaknesses together with the recommended corrective actions were highlighted to the management. There were no material losses incurred during the current financial year as a result of the weaknesses in the internal controls and management is proactive in strengthening the internal control environment. Follow-up audit reviews were conducted to ensure that corrective actions are being implemented accordingly.

The Audit Committee then deliberates on the internal audit reports to ensure recommendations from the reports are duly acted upon by management. NOTICES

All the internal audit activities were performed in-house and the total costs incurred in managing the Group IAD in 2012 was RM323,000.

Further details of the activities of Group IAD are set out in the Statement on Risk Management and Internal Control on pages 80 to 82 of this Annual Report. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 80

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The Board of Directors (“the Board”) of Mah Sing Group Berhad is committed to nurture and maintain a sound risk management framework and system of internal controls throughout its group of companies. The Board’s Statement on Risk Management and Internal Control (“the Statement”) featuring the Group’s risk management framework and its state of internal control is outlined as follows. The Statement is made in accordance with Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers and the Principle 6: Recommendation 6.1 (with Commentary) of the Malaysian Code on Corporate Governance (“MCCG”) 2012.

THE BOARD’S RESPONSIBILITY

The Board affirms its overall responsibility for the Group’s systems of internal controls and risk management in order to safeguard shareholders’ investment and the Group’s assets. The Board ensures the adequacy, effectiveness and integrity of the internal control systems through regular reviews, accompanied by ongoing risk management process.

It should be noted that such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and therefore can provide only reasonable and not absolute assurance against material misstatement or loss.

Based on the following descriptions of the ERM framework and internal control systems, we are pleased to state that the system of internal controls and risk management processes are generally in place and adequate for its purpose. The management is expected to ensure the continual review of the Group’s risk profiles, the related business processes and the monitoring of the implementation of Management Action Plans (“MAPs”) in order to promote a balance of risk and return in daily business operations.

ENTERPRISE RISK MANAGEMENT (“ERM”)

The Board confirms that the Group has in place an ERM Framework for the on-going process of identifying, evaluating, monitoring and managing the significant risks affecting the achievement of the Group’s business objectives.

The key aspects of the ERM Framework (Figure 1) are:-

• The Risk Management Teams comprising management staff from the Corporate, Property and Plastics Divisions are charged with the responsibilities of continuous monitoring and management of the risks of the Group; • ERM assessment reviews are performed annually to identify, assess and manage the risks faced by the Group. The ERM assessment reviews are carried out to address major risk areas of concern, if any from the perspectives of environmental, regulatory & legal, governance & operational controls, financial, customers, products & services, suppliers and human capital; • Likelihood of occurrence of those risk factors and magnitude of their impact are determined based on division’s level of risk tolerance defined earlier and the previously established risk matrix table; • Key risk management strategies or MAPs to key business processes are identified based upon risk evaluation where overall risk rating and profile are determined; • The key risks identified during the ERM assessment reviews together with the controls for managing them and the MAPs to be implemented are summarized in the Key Residual Risk Profiles and Risk Registers, serving as the supporting details for the ERM Assessment Report and as the means for assuring the Audit Committee that the ERM processes are effective; • ERM compliance reviews are carried out on a continuous basis to ensure the controls/ key risk management strategies for managing risks are functioning effectively. All are recorded in the Documented ERM Compliance Review including the implementation status of MAPs; • The Audit Committee upon receiving the ERM Assessment Report and Documented ERM Compliance Review from Group Internal Auditors shall review and monitor the effectiveness of the Group’s systems of internal controls before onward submission to the Board for endorsement. The Chairman of the Audit Committee would inform the Directors, of any salient matters noted by the Audit Committee and which require the Board’s notice or direction. Further details on the Audit Committee are set out in the Audit Committee Report on pages 76 to 79 of this Annual Report; and • The results of the ERM Framework, ie. the internal control procedures that are identified to address key risks, are used as one of the basis to develop risk-based internal audit plan.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL MESSAGES ACTIVITIES Risk Defined Risk Identification Risk Assessment

• Define division’s • Identify risk • Determine risk level of risk areas of concern likelihood & tolerance & impact establish risk matrix table GOVERNANCE

ERM STRUCTURE ERM PROCESSES Board of Directors

Audit Committee FINANCIALS

Group Internal Audit Risk Management Teams

DIVISION INFORMATION ADDITIONAL Corporate Property Plastics

Risk Review Risk Treatment Risk Evaluation

• On-going • Decision on • Determine overall monitoring of control risk rating &

risk/control & procedures/MAPs profile NOTICES MAPs implementation status

Figure 1: ERM Framework FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 82

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

INTERNAL CONTROL

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

• Group Vision, Mission, Corporate Culture, Code of Conduct are communicated to employees through employee handbook which defines the conduct of work required; • Operational structure with defined lines of responsibility and delegation of authority. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability; • Standard operating policies and procedures are in place and are periodically updated to reflect changing risks or to resolve operational deficiencies. Instances of non-compliance with such policies and procedures are reported thereon by Group Internal Audit to the Audit Committee; • Key functions such as business development, human resources, finance, tax, management information system, treasury, secretarial, corporate and legal matters are centralized at the head office; • Detailed budgeting process is established requiring all business units to prepare budget and business plan on an annual basis; • Effective reporting systems which highlight significant variances against budget and plan are in place to monitor performance. Key variances are followed up by the management and management action is taken, where necessary and reported to senior management on a regular basis. The Group Managing Director / Group Chief Executive meets on a regular basis with all divisional heads to review the Group’s financial performance, business developments, management and corporate issues; • An on-going training and educational programme for Directors and relevant staff in assessing the adequacy and integrity of the Group’s risks and control processes; • The professionalism and competency of staff are being emphasized through continuous training and regular performance evaluation; • The Group’s Property Division has been accorded the ISO 9001:2008 Quality Management System accreditation, demonstrating the Group’s quest in consistently improving the strength of its internal controls. As part of the requirements of the certification, scheduled audits are conducted internally by ISO function of the Quality Assurance department as well as by auditors of the relevant certification bodies. The Group’s Plastics Division received the accreditation for ISO 9001:2000 in the year 2000 and thereafter has been upgraded to conform to the requirements of ISO 9001:2008; • Where relevant, external certification/ standards such as the Construction Quality Assessment System (“CONQUAS”) standards were adopted to further strengthen and improve delivery processes and quality; and • Group Internal Audit independently reviews the internal controls to provide the Audit Committee with sufficient assurance that the systems of internal controls are effective in addressing the risks identified. On a quarterly basis, Group Internal Audit submits reports and plans for review and approval by the Audit Committee.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 MAH SING GROUP BERHAD ANNUAL REPORT 2012 84

DIRECTORS’ REPORT

The Directors are pleased to submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services to subsidiary companies in the Group. The principal activities of the subsidiary companies are set out in Note 18 to the Financial Statements. There have been no significant changes in the nature of the activities of the Group and of the Company during the financial year.

RESULTS

The results of the Group and of the Company for the financial year are as follows:

The Group The Company RM’000 RM’000 Profit attributable to: Equity holders of the Company 230,617 103,835 Non-controlling interests 1,151 - 231,768 103,835

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

DIVIDENDS

On 26 September 2012, the Company paid a first and final gross dividend of 11.0 sen per ordinary share of RM0.50 each, less income tax of 25%, amounting to RM69,163,392 in respect of the financial year ended 31 December 2011 as approved by the shareholders at the last Annual General Meeting.

The Directors have proposed a first and final gross dividend of 7.6 sen per ordinary share of RM0.50 each consisting of 0.4 sener p share less income tax of 25% and single-tier dividend of 7.2 sen per share, in respect of the current financial year. The proposed first and final dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company and has not been included as a liability in the financial statements for the current financial year. Such dividend when approvedby shareholders will be accounted for in equity as an appropriation of retained earnings during the financial year ending 31 December 2013.

RESERVES AND PROVISIONS

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

SHARE CAPITAL

During the financial year, the issued and paid-up share capital of the Company was increased from RM415,936,070 to RM419,933,655 by way of issuance of 8,051 and 7,987,120 new ordinary shares of RM0.50 each at an exercise price of RM0.64 and RM1.65 respectively, pursuant to exercise of employees’ share options. The resulting premium arising from the shares issued of RM9,186,315 has been credited to the share premium account.

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

DIRECTORS’ REPORT MESSAGES

EMPLOYEES’ SHARE OPTION SCHEME

At the Extraordinary General Meeting held on 8 March 2004, the Company’s shareholders approved the establishment of an Employees’ Share Option Scheme (“ESOS” or “Scheme”) which is governed by the ESOS By-Laws (“By-Laws”).

The salient features of the ESOS are inter alia as follows:

(a) The ESOS was implemented on 12 July 2004 and was in force for a period of 5 years (“Initial Period”). On 10 July 2009, the GOVERNANCE ACTIVITIES ESOS was extended for another 5 years up to 10 July 2014 in accordance with the terms of the ESOS By-Laws;

(b) The total number of new shares to be offered pursuant to the exercise of options granted under the ESOS (“Option”) shall be subject to a maximum of 10% of the Company’s issued and paid-up share capital at the time of the offer;

(c) Employees (including Executive Directors) of the Company or its subsidiary companies (other than dormant subsidiaries) shall be eligible to participate in the ESOS, if as at the date of offer, the employee:

(i) has attained the age of eighteen (18) years; (ii) is employed full-time by and on the payroll of the Company or its subsidiary companies; and (iii) is a confirmed employee of the Company or its subsidiary companies.

The allocation criteria of new ordinary shares comprised in the options to eligible employees shall be determined at the discretion of the Option Committee. The participation of an Executive Director of the Company in the ESOS shall be approved by the shareholders of the Company in a general meeting;

(d) The price payable upon exercise of an Option shall be based on the weighted average market price of the Company’s

shares as shown in the Daily Official List of the Bursa Malaysia Securities Berhad for the five (5) market days immediately FINANCIALS preceding the date of offer with an allowance of a discount of not more than 10%, or at the par value of the Company’s share, whichever is higher;

(e) Subject to any adjustments which may be made pursuant to the By-Laws, the maximum number of new shares that may be offered to an eligible employee shall be determined at the discretion of the Option Committee after taking into consideration the performance, seniority and length of service of the eligible employees, subject to the following:

(i) not more than fifty per cent (50%) of the new shares available under the Scheme should be allocated, in aggregate, to INFORMATION

the Executive Directors and senior management of the Group; and ADDITIONAL (ii) not more than ten per cent (10%) of the new shares available under the Scheme should be allocated to any eligible employee, who either singly or collectively through his or her associates, holds twenty per cent (20%) or more in the issued and paid-up capital of the Company.

(f) The new ordinary shares to be issued upon exercise of the Options shall, upon allotment and issue, rank pari passu with the then existing ordinary shares, except that they will not be entitled to any dividends, rights, allotments and/or other distributions declared by the Company which entitlement thereof precedes the allotment date of the new ordinary shares allotted pursuant to the exercise of the Options; and

(g) The exercise price and the number of new ordinary shares comprised in the Options are subject to adjustment in the event NOTICES of alteration to the share capital of the Company in accordance with the provisions in the By-Laws. However, no adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary share in the Company. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 86

DIRECTORS’ REPORT

The movements in the Company’s Options are as follows:

Number of options over ordinary shares of RM0.50 each (Unit’000) Offer Date Exercise price At 1.1.2012 Granted Exercised Lapsed At 31.12.2012 RM

9 Jun 2006 0.64 51 - (8) - 43 25 Nov 2010 1.65 47,728 - (7,847) (2,297) 37,584 6 Dec 2010 1.65 605 - (140) - 465 30 July 2012 1.92 - 13,257 - (532) 12,725 48,384 13,257 (7,995) (2,829) 50,817

OTHER STATUTORY INFORMATION

Before the income statements, statements of comprehensive income and the statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:

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

(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

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

(a) which would render the amount written off as bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

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

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

(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.

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

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

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

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of theroup G and of the Company to meet their obligations as and when they fall due.

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

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

DIRECTORS’ REPORT MESSAGES

DIRECTORS

The Directors who have held office since the date of the last report are as follows:

Jen. Tan Sri Yaacob Bin Mat Zain (R) Tan Sri Dato’ Sri Leong Hoy Kum Dato’ Ng Poh Seng

Lim Kiu Hock GOVERNANCE ACTIVITIES Leong Yuet Mei Captain Izaham Bin Abd. Rani (R) Loh Kok Leong

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the interests of the Directors who held office at the end of the financial year in the ordinary shares and options over ordinary shares of the Company is as follows:

(a) Shares in the Company

Number of ordinary shares of RM0.50 each (Unit’000) Balance at Balance at 1.1.2012 Addition Disposal 31.12.2012 Indirect interest FINANCIALS

Jen. Tan Sri Yaacob Bin Mat Zain (R)* 25 - - 25 Tan Sri Dato’ Sri Leong Hoy Kum** 292,981 125 - 293,106 Leong Yuet Mei* 172 15 (30) 157 Dato’ Ng Poh Seng - 750 (730) 20 Lim Kiu Hock - 750 - 750 INFORMATION * Deemed interest by virtue of shareholding of family member(s) ADDITIONAL ** Deemed interest by virtue of shareholding of Mayang Teratai Sdn Bhd and his family member(s)

By virtue of Tan Sri Dato’ Sri Leong Hoy Kum having an indirect interest of more than 15% of the shares in the Company, he is deemed to have interests in the shares of all the Company’s subsidiaries to the extent the Company has an interest. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 88

DIRECTORS’ REPORT

(b) Options Pursuant to ESOS

Number of option over ordinary shares of RM0.50 each (Unit’000) Exercise Price Balance at Balance at RM 1.1.2012 Granted Exercised 31.12.2012

Direct interest Tan Sri Dato’ Sri Leong Hoy Kum 1.65 4,800 - - 4,800 Dato’ Ng Poh Seng 1.65 3,000 - (750) 2,250 Lim Kiu Hock 1.65 3,000 - (750) 2,250 Indirect interest Tan Sri Dato’ Sri Leong Hoy Kum* 1.65 2,500 - (125) 2,375 1.92 - 200 - 200 Leong Yuet Mei* 1.65 105 - (15) 90 1.92 - 45 - 45

* Deemed interest by virtue of options held by family member(s)

None of the other Directors in office at the end of the financial year held any interest in the shares and options over ordinary shares of the Company and its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, none of the Director of the Company has received or become entitled to receive any benefit (other than the fees, other emoluments and benefits-in-kind as shown in Note 42 to the Financial Statements) by reason of a contract made by the Company or by a related corporation with the Director or with a firm of which the Director is a member or with a company in which the Director has a substantial financial interest except for those benefits which may be deemed to have arisen by virtue of those transactions entered into in the ordinary course of business by the Company and its subsidiary companies with the Directors or the companies in which the Directors are deemed to have substantial financial interests as disclosed in Note 42 to the Financial Statements.

Neither during nor at the end of the financial year was the Company or any of its related corporations a party to any arrangement whose object was to enable the Directors to acquire benefits through the acquisition of shares in, or debentures of, the Company or any other body corporate other than the aforementioned ESOS entitlements to subscribe for new ordinary shares.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

DIRECTORS’ REPORT MESSAGES

AUDITORS

The auditors, Messrs. Deloitte KassimChan, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors: CIIISGOVERNANCE ACTIVITIES

JEN. TAN SRI YAACOB BIN MAT ZAIN (R) Chairman

TAN SRI DATO’ SRI LEONG HOY KUM Managing Director

Kuala Lumpur

27 February 2013 FINANCIALS INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 90

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MAH SING GROUP BERHAD

Report on the Financial Statements

We have audited the financial statements of MAH SING GROUP BERHAD, which comprise the statements of financial position of the Group and of the Company as of 31 December 2012 and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 92 to 176.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012 and of their financial performance and cash flows for the financial year then ended.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MAH SING GROUP BERHAD MESSAGES

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that:

(a) in our opinion the accounting and other records and the registers required by the Act to be kept by the Company and the subsidiary companies of which we have acted as auditors, have been properly kept in accordance with the provisions of the Act;

(b) we have considered the accounts and auditors’ reports of the subsidiary companies, of which we have not acted as auditors, GOVERNANCE ACTIVITIES as disclosed in Note 18 to the financial statements, being accounts that have been included in the financial statements of the Group;

(c) we are satisfied that the accounts of the subsidiary companies that have been consolidated in the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group, and we have received satisfactory information and explanations as required by us for these purposes; and

(d) the auditors’ reports on the accounts of the subsidiary companies were not subject to any qualification and did not include any adverse comment made under Section 174 (3) of the Act.

Other Reporting Responsibilities

The supplementary information set out in Note 44 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1 “Determination of Realised and Unrealised Profit or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. FINANCIALS Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility towards any other person for the contents of this report. INFORMATION ADDITIONAL

DELOITTE KASSIMCHAN AF 0080 Chartered Accountants NOTICES KAMARUL BAHARIN BIN TENGKU ZAINAL ABIDIN Partner - 2903/11/13 (J) Chartered Accountant

27 February 2013 FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 92

INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

The Group The Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000

Revenue 5 1,775,260 1,570,696 158,593 138,306 Cost of sales 6 (1,252,001) (1,138,700) - - Gross profit 523,259 431,996 158,593 138,306 Other income 30,409 10,952 - 2,729 Selling and marketing expenses (96,125) (68,568) - - Administrative expenses (117,598) (97,478) (15,147) (26,487) Other operating expenses (32,217) (45,401) - - Results from operating activities 307,728 231,501 143,446 114,548 Interest income 9 9,997 10,166 - - Finance costs 10 (2,202) (3,039) (35,335) (21,525) Net finance income/(costs) 7,795 7,127 (35,335) (21,525) Profit before tax 7 315,523 238,628 108,111 93,023 Income tax expense 11 (83,755) (69,991) (4,276) (5,976) Profit for the year 231,768 168,637 103,835 87,047

Attributable to: Equity holders of the Company 230,617 168,556 Non-controlling interests 1,151 81 231,768 168,637 Earnings per ordinary share (sen): - Basic 12(a) 27.61 20.27 - Diluted 12(b) 27.14 19.74 Gross dividend per ordinary share (Proposed) - sen 13 7.6 11.0 7.6 11.0

The accompanying Notes form an integral part of the Financial Statements.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 MESSAGES

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Profit for the year 231,768 168,637 103,835 87,047

Other comprehensive income GOVERNANCE ACTIVITIES Foreign currency translation difference on foreign operations (995) 8,357 - - Total comprehensive income for the year 230,773 176,994 103,835 87,047

Attributable to: Equity holders of the Company 229,995 176,546 103,835 87,047 Non-controlling interests 778 448 - - 230,773 176,994 103,835 87,047

The accompanying Notes form an integral part of the Financial Statements. FINANCIALS INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 94

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2012

The Group The Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000

ASSETS Non-current Assets Property, plant and equipment 14 101,483 85,325 885 929 Prepaid lease payments 15 7,249 2,890 - - Investment properties 16 71,126 56,076 - - Land held for property development 20 419,280 71,869 - - Intangible assets 17 12,541 70 - - Investment in subsidiary companies 18 - - 189,096 106,555 Investment in associated company 19 - - - - Deferred tax assets 31 64,456 27,457 - - 676,135 243,687 189,981 107,484

Current Assets Property development costs 20 1,885,233 1,536,097 - - Inventories 21 39,722 43,781 - - Trade and other receivables 22 398,031 355,570 835,079 789,920 Current tax assets 6,505 5,529 1,750 3,236 Deposits, cash and bank balances 23 589,460 665,717 239,758 381,013 2,918,951 2,606,694 1,076,587 1,174,169 TOTAL ASSETS 3,595,086 2,850,381 1,266,568 1,281,653

The accompanying Notes form an integral part of the Financial Statements.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2012 MESSAGES

The Group The Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000

EQUITY AND LIABILITIES

Capital and Reserves GOVERNANCE ACTIVITIES Share capital 24 419,934 415,936 419,934 415,936 Reserves 25 171,176 160,449 168,030 156,681 Retained earnings 26 653,787 496,766 137,946 100,219 Equity attributable to equity holders of the Company 1,244,897 1,073,151 725,910 672,836 Non-controlling interests 10,104 15,338 - - Total Equity 1,255,001 1,088,489 725,910 672,836

Non-current Liabilities Redeemable convertible secured bonds 27 275,785 268,298 275,785 268,298 Term loans 28 590,400 666,508 - -

Long-term and deferred payables 29 57,974 12,364 - - FINANCIALS Deferred tax liabilities 31 21,973 6,888 3,612 5,507 946,132 954,058 279,397 273,805 Current Liabilities Trade and other payables 32 1,314,428 736,237 261,261 326,801 Term loans 28 28,675 34,981 - 8,211 Short-term borrowings 33 11,305 4,022 - - INFORMATION Bank overdrafts 34 519 150 - - ADDITIONAL Tax payables 39,026 32,444 - - 1,393,953 807,834 261,261 335,012 Total Liabilities 2,340,085 1,761,892 540,658 608,817 TOTAL EQUITY AND LIABILITIES 3,595,086 2,850,381 1,266,568 1,281,653

The accompanying Notes form an integral part of the Financial Statements. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 96

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 -- (373) (995) 1,188 (6,300) - (69,163) (7,200) (76,363) Distributable Distributable - - (622) - 719 - Equity- Equity settled component Attributable Non-distributable reservesNon-distributable reserves employees Exchange of equity to Non------(69,163) - - (719) Share Share benefit fluctuation convertible Retained holderscontrolling of capital premium reserve reserve bonds earnings the Company interests Total 13 Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 income - - - (622) during the year shares pursuant to shares ESOS exercised 3,998 9,186 (2,336) - - 2,336 13,184 - 13,184 share-based paymentshare-based interests remaining the non- from controlling shareholders - - 5,218 ------5,218 - (7,488) - 5,218 (7,488) income for the year for income - - - (622) - 230,617 229,995 778 230,773 At 1 January 2012yearfor the Profit Other comprehensive 415,936 131,101 8,451 3,768 - 17,129 496,766 - 1,073,151 15,338 - 1,088,489 - - 230,617 230,617 1,151 231,768 At 31 December 2012At 31 December Notes form an integral part of the Financial Statements. The accompanying 419,934 140,287 10,614 3,146 17,129 653,787 1,244,897 10,104 1,255,001 Issuance of ordinary Issuance ESOS lapsed Recognition of Recognition of the Acquisition Total comprehensive Total Dividends

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 MESSAGES - 17,129 CIIISGOVERNANCE ACTIVITIES - 17,129 Distributable FINANCIALS - 17,129 - Equity- Equity settled component Attributable INFORMATION Non-distributable reservesNon-distributable reserves ADDITIONAL employees Exchange of equity to Non- Share Share benefit fluctuation convertible Retained holderscontrolling of capital premium reserve reserve bonds earnings the Company interests Total 415,784 130,752 1,002 (4,222) - 375,550 918,866 17,590 936,456 415,936 131,101 8,451 3,768 17,129 496,766 1,073,151 15,338 1,088,489 NOTICES Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 FORM OF PROXY incomeincome for the yearshare-based paymentshares pursuant to - ESOS exercised - - - - - 152 - 7,508 349 - 7,990 7,990 (59) - - 168,556 - - - 176,546 - - - 448 176,994 7,990 59 7,508 367 501 8,357 - 7,508 - 501 convertible bonds 27 - - At 1 January 2011 Profit for the yearOther comprehensive comprehensive Total DividendsRecognition of Issuance of ordinary - 13Issuance of ------168,556 - 168,556 - (47,399) 81 168,637 (47,399) (2,700) (50,099) The accompanying Notes form an integral part of the Financial Statements. The accompanying At 31 December 2011 At 31 December

MAH SING GROUP BERHAD ANNUAL REPORT 2012 98

COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

Distributable Non-distributable reserves reserve Equity-settled Equity employees component Share Share benefit of convertible Retained capital premium reserve bonds earnings Total Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2012 415,936 131,101 8,451 17,129 100,219 672,836

Profit for the year - - - - 103,835 103,835 Other comprehensive income ------Total comprehensive income for the year - - - - 103,835 103,835 Dividends 13 - - - - (69,163) (69,163) Recognition of share-based payment - - 5,218 - - 5,218 Issuance of ordinary shares pursuant to ESOS exercised 3,998 9,186 (2,336) - 2,336 13,184 ESOS lapsed during the year - - (719) - 719 - At 31 December 2012 419,934 140,287 10,614 17,129 137,946 725,910

The accompanying Notes form an integral part of the Financial Statements.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 MESSAGES

At 1 January 2011 415,784 130,752 1,002 - 60,512 608,050

Profit for the year - - - - 87,047 87,047 Other comprehensive income ------Total comprehensive income for the year - - - - 87,047 87,047 Dividends 13 - - - - (47,399) (47,399) Recognition of share-based payment - - 7,508 - - 7,508 Issuance of ordinary shares pursuant to ESOS exercised 152 349 (59) - 59 501 Issuance of convertible bonds 27 - - - 17,129 - 17,129 FINANCIALS At 31 December 2011 415,936 131,101 8,451 17,129 100,219 672,836

The accompanying Notes form an integral part of the Financial Statements. INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 100

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Operating activities Profit before tax 315,523 238,628 108,111 93,023 Adjustments for: Allowance for doubtful debts: - trade and other receivables 4 76 - - - subsidiaries - - 85 - Allowance for slow-moving and impairment on inventories 1,043 26 - - Amortisation and impairment on intangible assets 427 - - - Amortisation of prepaid lease payments 410 314 - - Amortised cost adjustments 1,049 1,454 - - Bad debts written-off 761 - - - Depreciation of property, plant and equipment 13,522 11,435 137 104 Dividend income - - (107,733) (100,718) Finance costs 18,965 12,851 35,335 21,525 Gain on disposal of property, plant and equipment (779) (315) - - Gain on changes in fair value of investment properties (2,094) - - - Interest income (19,411) (14,541) (50,860) (37,460) Share-based payment 5,218 7,508 510 2,402 Property, plant and equipment written off 17 55 - - Provision for future operating lease commitment 1,636 11,800 - - Provision for post-employment benefits 919 737 - - Reversal of allowance of doubtful debts (136) - - - Reversal of allowance for inventories (419) (81) - - Reversal of impairment loss on property, plant and equipment (6) (6) - - Unrealised (gain)/loss on foreign exchange (922) 4,617 - (2,729) Amount due from a subsidiary company written off - - 92 - Operating cash flows before changes in working capital 335,727 274,558 (14,323) (23,853)

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

101

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 MESSAGES

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Changes in working capital Change in property development costs (194,035) (453,465) - - CIIISGOVERNANCE ACTIVITIES Change in inventories 3,184 (10,543) - - Change in receivables (45,416) 42,098 41,336 36,837 Change in payables 242,971 203,826 (27,335) (6,662) Total changes in working capital 6,704 (218,084) 14,001 30,175 Cash generated from/(used in) operations 342,431 56,474 (322) 6,322 Interest received 19,381 14,208 9,414 4,375 Interest paid (30,486) (28,460) (228) (2,822) Income tax paid (115,087) (79,588) (4,514) (1,121) Net cash generated from/(used in) operating activities 216,239 (37,366) 4,350 6,754 Investing activities Acquisition of investment in a subsidiary (Note 18) (56,758) - - - Additions to investment properties (12,956) (4,024) - - Additions to land held for property development (33,874) (8,980) - - FINANCIALS Dividends received - - 107,562 95,021 Net advances from/(to) subsidiaries - - (152,072) 55,994 Payment for acquisition of property, plant and equipment* (34,765) (28,484) (93) (128) Payment of balance of equity in subsidiaries (Note 18) (6,828) (7,420) (6,828) (7,420) Proceeds from disposal of property, plant and equipment 1,744 780 - - Subscription of shares in subsidiary companies - - (19,450) (4,000) INFORMATION

Net cash (used in)/generated from investing activities (143,437) (48,128) (70,881) 139,467 ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 102

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Financing activities Dividends paid (69,163) (47,399) (69,163) (47,399) Dividends paid to non-controlling shareholders (7,200) (2,700) - - (Placement)/Withdrawal of deposits pledged with licensed bank as collateral (9,267) 21,493 - - (Placement)/Withdrawal of deposits with licensed bank for Escrow Accounts (4,548) 9,249 - - Proceeds from ESOS exercised 13,184 500 13,184 500 Payment of corporate exercise expenses - (2,745) - (2,745) Proceeds from short-term borrowings 52,629 6,452 - - Proceeds from term loans 267,771 619,588 - - Proceeds from issuance of redeemable convertible secured bonds - 289,478 - 289,478 Payment of bonds coupon (10,534) (5,354) (10,534) (5,354) (Repayment of)/Proceeds from hire purchase and finance lease liabilities (1,692) 372 - - Repayment of short-term borrowings (45,230) (64,100) - (56,000) Repayment of term loans (349,096) (359,649) (8,211) (14,889) Net cash (used in)/generated from financing activities (163,146) 465,185 (74,724) 163,591 Net (decrease)/increase in cash and cash equivalents (90,344) 379,691 (141,255) 309,812 Cash and cash equivalents at beginning of the financial year 634,215 246,479 381,013 71,201 Currency translation differences (97) 8,045 - - Cash and cash equivalents at end of the financial year (Note 35) 543,774 634,215 239,758 381,013

* During the financial year, the Group acquired property, plant and equipment with an aggregate costs of RM36,398,170 (2011: RM30,872,620), of which RM1,632,700 (2011: RM2,389,045) were acquired by means of hire purchases and finance lease.

The accompanying Notes form an integral part of the Financial Statements.

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1. GENERAL INFORMATION

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

in the nature of the activities of the Group and of the Company during the financial year. GOVERNANCE ACTIVITIES

The registered office and principal place of business of the Company is located at Penthouse Suite 1, Wisma Mah Sing, 163, Jalan Sungai Besi, 57100 Kuala Lumpur.

The financial statements of the Group and of the Company were authorised for issuance by the Board of Directors in accordance with a resolution of Directors on 27 February 2013.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards (“FRSs”), the applicable approved accounting standards in Malaysia issued by the Malaysian Accounting Standards Board (“MASB”).

The financial statements are presented in Ringgit Malaysia (“RM”) which represents the functional currency of the Group and of the Company and all financial information presented in RM are rounded to the nearest thousand (“RM’000”), unless otherwise stated. FINANCIALS Malaysian Financial Reporting Standard (“MFRS Framework”)

On 19 November 2011, the Malaysian Accounting Standards Board (“MASB”) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS Framework”). The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture and/or IC Interpretation 15 Agreements for Construction of Real Estate, including its parent, significant investor and venturer (herein called “Transitioning Entities”). Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. INFORMATION ADDITIONAL On 30 June 2012, MASB announced that the Transitioning Entities are allowed to extend their deferment on the adoption of MFRS Framework for another year. As such, the MFRS Framework will be mandatory for Transitioning Entities for annual period beginning on or after 1 January 2014.

The Group falls within the scope definition of Transitioning Entities and has opted to defer adoption of the new MFRS Framework. Accordingly, the Group will be required to prepare financial statements using MFRS Framework in its first MFRS financial statements for the year ending 31 December 2014. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

The Group is currently reviewing its accounting policies to assess financial effects of the differences between the current NOTICES FRSs and accounting standards under the MFRS Framework. FORM OF PROXY

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NOTES TO THE FINANCIAL STATEMENTS

Adoption of New and Revised Financial Reporting Standards

In the current financial year, the Group and the Company adopted all the new and revised FRS and Issues Committee Interpretations (“IC Interpretations”) and amendments to FRSs and IC Interpretation issued by MASB that are relevant to their operations and effective for annual financial periods beginning on or after 1 January 2012.

FRS 7 Financial Instruments: Disclosures (Amendments relating to Disclosure - Transfers of Financial Assets) FRS 112 Income Taxes (Amendments relating to Deferred Tax - Recovery of Underlying Assets) FRS 124 Related Party Disclosures (Revised) IC Interpretation 14 FRS 119 - The limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction (Amendments relating prepayments of a minimum funding requirement) IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments

The adoption of these new and revised FRSs and IC Interpretations did not result in significant changes in the accounting policies of the Group and of the Company and has no significant effect on the financial performance or position of the Group and of the Company.

FRSs and IC Interpretations in Issue But Not Yet Effective

At the date of authorisation for issue of these financial statements, the new and revised Standards and IC Interpretations which were in issue but not yet effective and not early adopted by the Group and the Company are as listed below.

FRS 1 First-time Adoption of Financial Reporting Standards 1 FRS 7 Financial Instruments: Disclosures (Amendments relating to offsetting of Financial assets and Financial liabilities) 1 FRS 7 Financial Instruments: Disclosures (Consequential amendments resulting from amendments to FRS 9)3 FRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009)3 FRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010)3 FRS 10 Consolidated Financial Statements1 FRS 10 Consolidated Financial Statements (Amendments relating to further clarification on initial application of FRS 10)1 FRS 11 Joint Arrangements1 FRS 11 Joint Arrangements (Amendments relating to further clarification on initial application of FRS 11)1 FRS 12 Disclosures of Interests in Other Entities1 FRS 12 Disclosures of Interests in Other Entities (Amendments relating to further clarification on initial application of FRS 12)1 FRS 13 Fair Value Measurement1 FRS 101 Presentation of Financial Statements (Clarification of the requirements for comparative information)1 FRS 101 Presentation of Financial Statements (Amendments relating to Presentation of Items of Other Comprehensive Income)4 FRS 116 Property, Plant and Equipment (Classification of servicing equipment)1 FRS 119 Employee Benefits (2011)1 FRS 127 Separate Financial Statements (2011)1 FRS 128 Investment in Associates and Joint Ventures (2011)1 FRS 132 Financial Instruments: Presentation (Tax effect of distribution to holders of equity instruments)1 FRS 132 Financial Instruments: Presentation (Amendments relating to offsetting of Financial assets and Financial liabilities)2 FRS 134 Interim Financial Reporting1 IC Interpretation 2 Members’ Shares in Cooperative Entities and Similar Instruments (Tax effect of distribution to holders of equity instruments)1 IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine1

1 Effective for annual periods beginning on or after 1 January 2013 2 Effective for annual periods beginning on or after 1 January 2014 3 Effective for annual periods beginning on or after 1 January 2015 4 Effective for annual periods beginning on or after 1 July 2012

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Consequential amendments were also made to various FRSs as a result of these new/ revised FRSs.

The Directors anticipate that abovementioned Standards and IC Interpretations will be adopted in the annual financial statements of the Group and of the Company when they become effective and that the adoption of these Standards and IC Interpretations will have no material impact on the financial statements of the Group and of the Company in the period of initial application. CIIISGOVERNANCE ACTIVITIES 3. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements of the Group and of the Company have been prepared under the historical cost convention except as disclosed in the significant Group accounting policies. Historical cost is generally based on the fair value of the consideration given in exchange of assets.

Economic Entities in The Group

(a) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less accumulated

impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying FINANCIALS amounts is included in profit or loss.

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of financial reporting period. Subsidiaries are consolidated using the acquisition method of accounting.

The results of subsidiaries acquired or disposed during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. INFORMATION

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into ADDITIONAL line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

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

Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted at the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. FORM OF PROXY

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NOTES TO THE FINANCIAL STATEMENTS

Where the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 139 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

(b) Business Combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant FRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.

Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 3 (revised) are recognised at their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with FRS 112 Income Taxes and FRS 119 Employee Benefits respectively;

• liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in accordance with FRS 2 Share-based Payment; and

• assets (or disposal groups) that are classified as held for sale in accordance with FRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items of which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year.

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An associated company is a non-subsidiary company in which the Group holds not less than 20% of the equity voting rights as long-term investment and in which the Group is in a position to exercise significant influence in its management.

Investment in associated company is stated at cost less any impairment losses in the Company’s financial statements. The Group’s investment in associated company is accounted for under the equity method of accounting based on the

latest audited and/or the management financial statements of the associated company made up to 31 December 2012. GOVERNANCE ACTIVITIES Under this method of accounting, the Group’s interest in the post-acquisition profit and reserves of the associated company is included in the consolidated results while dividend received is reflected as a reduction of the investment in the consolidated statement of financial position. The carrying amount of such investment is reduced to recognise any decline, other than a temporary decline, in the value of the investment.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Foreign Currencies

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(b) Transactions and balances FINANCIALS Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Assets and liabilities of foreign subsidiary companies are translated to Ringgit Malaysia at rates of exchange ruling at the INFORMATION

reporting date and the results of foreign subsidiaries are translated at the average rate of exchange for the financial year. ADDITIONAL Exchange differences arising from the translation are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in profit or loss as part of the gain or loss on sale.

Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable for the sales of goods or services in the ordinary course of business. NOTICES

Revenue from property development projects is accounted for using the percentage of completion method where the outcome of the development can be reliably estimated and is in respect of sales where agreements have been finalised by the end of the financial year. The percentage/stage of completion is measured by reference to the costs incurred to date compared to the estimated total costs of the development.

Revenue from sale of completed properties is recognised upon the finalisation of sale and purchase agreements by the end of the financial year and when the risks and rewards of ownership have passed to the customers. FORM OF PROXY

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NOTES TO THE FINANCIAL STATEMENTS

Sales of goods are recognised upon delivery of products and where the risks and rewards of ownership have passed to the customers, or performance of services, net of sales taxes and discounts.

Other revenue earned by the Group is recognised on the following bases:

Interest income - recognised on a time proportion basis that reflects the effective yield on asset Dividend income - when the Group’s right to receive payment is established Maintenance charges - upon performance of services and management fee Rental income - accrued on a time basis, by reference to the agreements entered

Borrowing Costs

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

The amount of borrowing costs eligible for capitalisation is determined based on actual interest incurred on borrowings made specifically for the purpose of obtaining a qualifying asset and less any investment income on the temporary investment of that borrowing.

All other borrowing costs are recognised as finance costs in profit or loss in the financial year in which they are incurred.

Income Tax

Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax is accounted for using the “liability” method in respect of temporary differences arising from differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deferred tax assets can be utilised.

Deferred tax is measured at tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the end of the reporting period. Deferred tax is recognised in profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Unutilised reinvestment allowance, being tax incentive that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Financial Instruments

(i) Initial recognition and measurement

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

Where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial GOVERNANCE asset ACTIVITIES within the timeframe established by the market concerned, such financial assets are recognised and derecognised on trade date.

Financial instruments are initially measured at fair value, plus transaction costs that are directly attributable to the acquisition or issue of the financial instruments, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

(ii) Financial instrument categories and subsequent measurement

Financial assets

Financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss” (FVTPL), “held-to-maturity” investments, “available-for-sale” (AFS) financial assets and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are

potentially favourable, or an equity instrument of another enterprise. FINANCIALS

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market (including fixed deposits with financial institutions). Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. INFORMATION

(b) Effective interest method ADDITIONAL

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. NOTICES FORM OF PROXY

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NOTES TO THE FINANCIAL STATEMENTS

Financial liabilities

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Financial liabilities are classified as either financial liabilities “at FVTPL” or “other financial liabilities”. The Group’s and the Company’s significant financial liabilities include trade and other payables, redeemable convertible secured bonds, terms loans and short-term borrowings which are initially measured at fair value and subsequently measured at amortised cost.

(a) Financial liabilities at FVTPL

Fair value through profit or loss category comprises financial liabilities that are held for trading, derivatives or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

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Derivative Financial Instruments

Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. No derivative was designated as hedging instrument during the current financial year. CIIISGOVERNANCE ACTIVITIES A derivative with a positive fair value is recognised as a financial asset; a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months.

During the year, the Group enters into a derivative financial instruments to manage its exposure to foreign exchange rate via foreign exchange forward contracts and recorded a gain of RM238,000. As at 31 December 2012, there is no outstanding derivative financial instruments reported by the Group.

Property, Plant and Equipment

Buildings are stated at cost or valuation less accumulated amortisation/depreciation and accumulated impairment losses. Other property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The costs of property, plant and equipment comprise their purchase costs and any expenditure that is directly attributable to the acquisition of the assets.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be

measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged FINANCIALS to profit or loss during the financial period in which they are incurred.

Certain leasehold buildings were revalued by the Directors based on valuations carried out by independent professional valuers. The Directors have applied the transitional provisions when MASB first adopted IAS 16 - Property, Plant and Equipment. By virtue of this transitional provision, upon implementation in 1998 of MASB Approved Accounting Standard IAS 16 for the first time, an enterprise is allowed to continue carrying those assets at their previous valuations subject to continuity in depreciation policy on the requirement to write an asset down to its recoverable amount. Accordingly, these valuations have not been updated. INFORMATION ADDITIONAL Surpluses arising on revaluation are credited to the revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to profit or loss. On disposal of revalued assets, amounts in the revaluation reserve relating to those assets are transferred to retained earnings.

Depreciation of other assets is calculated so as to write off the costs or valuations of the assets to their estimated residual values on a straight line basis over the expected useful economic lives of the assets concerned. The principal annual rates are reassessed and established as follows:

2012 2011 NOTICES Buildings 2% - 10% 3.33% - 10% Renovations 3.33% - 10% 3.33% - 10% Plant, machinery and factory equipment 10% - 25% 10% - 25% Motor vehicles 12.5% - 20% 12.5% - 15% Furniture, fittings, office and IT related equipments 8% - 33.33% 8% - 25%

Depreciation for certain moulds by a foreign subsidiary for specific projects is determined using the units of production method FORM OF with expected year ranging between 2 to 10 years. PROXY

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NOTES TO THE FINANCIAL STATEMENTS

During the financial year, the Group revised the depreciation rates for buildings, motor vehicles, office and IT related equipments from 3.33% - 10%, 12.5% - 15% and 8% - 25% to 2% - 10%, 12.5% - 20% and 8% - 33.33% respectively. The effect of this accounting change is to increase the depreciation charge and correspondingly decrease the profit before tax in the current year by RM1,148,516.

Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The residual value and the useful life of an asset is reviewed at each financial year-end and, if expectations differ from previous estimates, the changes will be accounted for as a change in an accounting estimate.

At each reporting date, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write-down is made if the carrying amount exceeds the recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit/(loss) from operations. On disposal of revalued assets, amounts in revaluation reserve relating to those assets are transferred to retained earnings.

Finance Leases - For Lessee

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases.

Property, plant and equipment under finance leases are capitalised and the capital element of the lease commitments is reflected as lease payables. The capital element of the lease instalments is applied to reduce the outstanding obligations whereas the interest element is charged against the profit or loss so as to give a constant periodic rate of charge on the remaining balance outstanding at the end of each reporting period.

Property, plant and equipment acquired under finance lease are capitalised and depreciated over the same useful economic lives as similar equivalent owned property, plant and equipment.

Operating Leases - For Lessee

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the profit or loss over the lease period.

Prepaid Lease Payments

Leasehold land that has an indefinite economic life and title that is not expected to pass to the Group by the end of the lease period is classified as operating lease. The upfront payments for right to use the leasehold land over a predetermined period are accounted for as prepaid lease payments and are stated at cost less amount amortised.

Certain leasehold land of a subsidiary company was last revalued in 1992. As allowed by the transitional provision of FRS 117, the prepaid lease payments at valuation are stated on the basis of its 1992 valuation and the said valuation has not been updated.

Short term and long term leasehold land recognised as prepaid lease payments are amortised in equal instalments over the respective lease periods.

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Investment Properties

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

A property interest under an operating lease is classified and accounted for as an investment property on a property-by- property basis when the Group holds it to earn rentals or for capital appreciation or both. CIIISGOVERNANCE ACTIVITIES Investment properties are measured initially at cost and subsequently at fair value with any change therein recognised in profit or loss for the period in which they arise.

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

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied, the deemed cost for subsequent accounting is the fair value at the date of change in use.

Property Development Activities

(a) Land held for property development

Land held for property development consists of land on which no significant development work has been undertaken or where development activities are not expected to be completed within the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses.

Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp duties, FINANCIALS commissions, conversion fees and other relevant levies. Where the Group had previously recorded the land at a revalued amount it continues to retain this amount as its surrogate cost as allowed by FRS 2012004. Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount.

Land held for property development is transferred to property development costs (under current assets) when development activities have commenced and where the development activities can be completed within the Group’s normal operating cycle. INFORMATION (b) Property development costs ADDITIONAL

Property development costs comprise costs associated with the acquisition of land and all costs directly attributable to development activities or that can be allocated on a reasonable basis to these activities.

When the outcome of the development activity can be estimated reliably, property development revenue and expenses are recognised by using the stage of completion method. The stage of completion is measured by reference to the proportion that property development costs incurred bear to the estimated total costs for the property development.

When the outcome of a development activity cannot be reliably estimated, property development revenue is recognised

only to the extent of property development costs incurred that are probable of recovery. NOTICES

Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable that total property development costs (including expected defect liability expenditure) will exceed total property development revenue, the expected loss is recognised as an expense immediately.

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

Where revenue recognised in the income statements exceeds billings to purchasers, the balance is shown as accrued FORM OF billings under trade and other receivables (within current assets). Where billings to purchasers exceed revenue recognised PROXY in the income statements, the balance is shown as progress billings under payables (within current liabilities).

MAH SING GROUP BERHAD ANNUAL REPORT 2012 114

NOTES TO THE FINANCIAL STATEMENTS

Intangible Assets

(a) License fee

All costs incurred in the acquisition of license for assembly of certain plastic products are capitalised and amortised on a straight line basis over a period of 10 years and they will be written off when, in the opinion of the Directors, the future economic benefits are uncertain.

Where an indication of impairment exists, the carrying amount of the intangible assets are assessed and written down immediately to its recoverable amount.

(b) Goodwill on Consolidation

Goodwill is identified as any excess of the consideration paid over the Group’s share of fair value of the identifiable assets, liabilities and contingent liabilities acquired as at the date of acquisition. Goodwill is initially measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Where the consideration is lower than the Group’s share of net fair value of the identifiable assets, liabilities and contingent liabilities acquired, the difference is recognised as negative goodwill. Negative goodwill is recognised immediately in profit or loss.

Goodwill acquired is allocated to the cash-generating units (“CGU”) expected to benefit from the acquisition synergies. An impairment loss is recognised in the profit or loss when the carrying amount of the CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount is the higher of the CGU’s fair value less costs to sell and its value in use. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

The total impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each assets in the CGU. Impairment loss on goodwill is not reversed in a subsequent period.

Inventories

Inventories of completed properties are stated at the lower of cost and net realisable value. Cost includes the relevant cost of land and development expenditure.

Inventories of raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of raw materials comprises the original purchase price plus cost incurred in bringing the inventories to their present location and condition. The costs of finished goods and work-in-progress comprise raw materials, direct labour, other direct costs and an appropriate proportion of production overheads.

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

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Impairment of Non-Financial Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset or Cash-Generating Unit (“CGU”) exceeds its recoverable amount. The recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and value in use. For the purpose of assessing impairment, the Group estimates the recoverable amount of the CGU to which the assets belongs. GOVERNANCE ACTIVITIES

Non-financial assets other than goodwill that suffer an impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to the profit or loss unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. Impairment losses on goodwill are not reversed.

An impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. A reversal is recognised in profit or loss, unless it reverses an impairment loss on revalued assets, in which case, the reversal is treated as a revaluation increase.

Impairment of Financial Assets

All financial assets (except for financial assets categorised as fair value through profit or loss) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. FINANCIALS For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of loans and receivable and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the INFORMATION difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair ADDITIONAL value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised in profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in the statement of comprehensive income for an investment in an equity instrument is not reversed through profit or loss. NOTICES

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the statement of comprehensive income, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 116

NOTES TO THE FINANCIAL STATEMENTS

Convertible Secured Bonds

Convertible secured bonds are separated into the equity and liability components at the date of issue. The liability component is recognised initially at its fair value. Subsequent to initial recognition, it is carried at amortised cost using the effective interest method until the liability is extinguished on conversion or redemption of the bonds. The equity component is the residual amount of the convertible bonds after deducting the fair value of the liability component. This is recognised and included in equity, net of transaction costs and deferred tax effect, and is not subsequently remeasured.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Contingent Liabilities and Contingent Assets

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

Equity Instruments

(a) Classification as Debt or Equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

(b) Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds received, net of direct issue costs.

Employee Benefits

(i) Short-term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees of the Group and the Company. Short term accumulating compensated absences for paid annual leave when services are rendered by employees that increase their entitlement to future compensated absences are recognised based on the experience that absences will occur.

(ii) Defined contribution plan

The Group and the Company are required by law to make monthly contributions to the Employees Provident Fund (“EPF”), a statutory defined contribution plan for all their eligible employees based on certain prescribed rates of the employees’ salaries. The Group’s and the Company’s contributions to EPF are disclosed separately. The employees’ contributions to EPF are included in salaries and wages.

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

(iii) Defined benefit plan

A foreign subsidiary operates an unfunded defined Retirement Benefit Scheme (“RBS”) for its eligible employees. The foreign subsidiary’s obligations under RBS are determined based on external actuarial valuation in accordance with the labour law requirements in that country where the amount of benefits that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted using the Projected Unit Credit Method in order to determine its present value. Actuarial gains and losses are recognised as income or expense over the expected

average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains GOVERNANCE or ACTIVITIES losses for RBS exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets. Past service cost is recognised immediately to the extent that the benefits are already vested; otherwise, it is amortised on a straight-line basis over the average period until the benefits become vested.

The amount recognised at the end of the reporting period represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and reduced by the fair value of plan assets. Plan assets resulting from this calculation are to be used only to settle the employee benefit obligations and only can be returned to the enterprise if the remaining assets of the fund are sufficient to meet the plan’s obligation to pay the related employee benefits directly.

(iv) Employees’ share option scheme (“ESOS”)

The Group operates an ESOS plan for the employees of the Group as set out in Note 24. The fair value of the employee services received in exchange for the grant of the share options is recognised as an expense in profit or loss over the vesting periods of the grant with a corresponding increase in equity.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options

granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). FINANCIALS Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At the end of each reporting period, the Group revises its estimates of the number of share options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium. INFORMATION

Cash and Cash Equivalents ADDITIONAL

The Group and the Company adopt the indirect method in the preparation of statements of cash flows. Cash and cash equivalents are short-term, highly liquid investments with maturities of three months or less from the date of acquisition and are readily convertible to cash with insignificant risk of changes in value.

Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenue and expenses that related to transactions with any of the Group’s other components.

An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions NOTICES about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 118

NOTES TO THE FINANCIAL STATEMENTS

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

(a) Critical judgements in applying the Group’s accounting policies

The management is of the opinion that there are no instances of application of critical judgements in applying the Group’s accounting policies which are expected to have a significant effect on the amounts recognised in the financial statements.

(b) Key sources of estimation uncertainty

Management believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year other than as disclosed below:

(i) Property development revenue

The Group recognised property development revenue based on percentage of completion method. The percentage of completion is measured by reference to the property development costs incurred to date to the estimated total costs for the property development. The percentage of completion method requires the Group to make reasonably dependable estimates of progress towards completion of property development projects and costs in determining the percentage of completion, and the recoverability of development projects. In making the estimate, management relied on opinion/service of experts, past experience and a continuous monitoring mechanism.

(ii) Deferred tax assets

Deferred tax assets are recognised for unused tax losses, unabsorbed capital allowances and other deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, capital allowances and other deductible temporary differences can be utilised. Management judgement is required in determining the amount of deferred tax assets that can be recognised, based on the assessment of the probability of the future taxable profits.

(iii) Impairment on goodwill

The assessment of whether goodwill is impaired requires an estimation of the value in use of the cash-generating units from which goodwill arises. The value in use calculation requires the Directors to estimate the future cash flows reflected by the remaining proportion of the gross development value of unrecognised revenue from the related property development project on which the goodwill arises.

(iv) Valuation of investment properties

The Group ascertained the fair value of its investment properties in reference to the selling prices of recent transactions of similar properties except for investment properties under construction in which their fair values are not reliably determinable, investment properties under construction are measured at cost until either the fair value becomes reliably determinable or when construction is completed, whichever is earlier. In the absence of recent transactions, value in use calculation which uses cash flow projections of rental income expected to be generated throughout the useful life periods and the terminal value of these investment properties discounted based on the average borrowing rate of the Group will be applied.

The Directors believe that the chosen valuation techniques and assumptions used are appropriate in determining the fair value of the Group’s investment properties.

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

5. REVENUE

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Property development revenue 1,535,271 1,358,586 - GOVERNANCE - ACTIVITIES Sales of goods 211,287 202,610 - - Sales of completed properties 18,683 4,829 - - Dividend income from subsidiary companies - - 107,733 100,718 Interest income from: - bank deposits 9,414 4,375 9,414 4,375 - advances to subsidiaries - - 41,446 33,085 Rental income 534 206 - - Management fees - - - 128 Others 71 90 - - 1,775,260 1,570,696 158,593 138,306

6. COST OF SALES FINANCIALS

The Group 2012 2011 RM’000 RM’000

Property development costs 1,058,950 963,451 Cost of goods sold 181,417 171,378 INFORMATION

Cost of completed properties sold 11,542 3,871 ADDITIONAL Maintenance fees 92 - 1,252,001 1,138,700 Included in cost of goods sold are the following:

Raw materials and consumables used 152,938 148,962 Changes in inventories of finished goods and work in progress (2,028) (1,163) 150,910 147,799 NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 120

NOTES TO THE FINANCIAL STATEMENTS

7. PROFIT BEFORE TAX

The Group The Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000

Profit before tax is arrived at after charging: Allowance for doubtful debts - trade and other receivables 22 4 76 - - - subsidiaries 22 - - 85 - Allowance for slow-moving and impairment on inventories 21 1,043 26 - - Amortisation and impairment on intangible assets 17 427 - - - Amortisation of prepaid lease payments 15 410 314 - - Amortised cost adjustments: - trade and other receivables 1,483 370 - - - trade and other payables - 1,108 - long term and deferred payables 358 - - - 1,841 1,478 - - Amount due from a subsidiary company written off - - 92 - Auditors’ remuneration: Statutory: - current year 422 391 36 25 - underprovision in prior year 61 86 12 - Others 8 5 5 5 Bad debts written off 761 - - - Foreign exchange loss: - realised 4,364 151 3,342 138 - unrealised - 4,617 - - Interest expense in development costs 16,763 9,813 - - Lease rental expense 40 30,581 33,601 - - Preliminary and incorporation expenses 147 4 - - Property, plant and equipment: - depreciation 14 13,522 11,435 137 104 - written-off 17 55 - - Provision for lease rental 32 1,636 11,800 - - Provision for post-employment benefits 30 919 737 - - Rental of premises 2,131 1,639 5 30 Waiver on interest receivables from purchasers 2,983 1,697 - -

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

The Group The Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000

And crediting:

Amortised cost adjustments: GOVERNANCE ACTIVITIES - trade and other payables 792 - - - - long term and deferred payables - 24 - - 792 24 - - Foreign exchange gain - realised 254 294 - - - unrealised 922 - - 2,729 Forfeiture income 1,197 430 - - Gain on changes in fair value of investment properties 16 2,094 - - - Gain on disposal of property, plant and equipment 779 315 - - Gain on foreign exchange forward contracts 238 - - - Lease rental income* 40 21,263 8,134 - - Rental income 390 - - -

Reversal of allowance for doubtful debts 22 136 - - - FINANCIALS Reversal of allowance for inventories 21 419 81 - - Reversal of impairment loss on property, plant and equipment 14 6 6 - -

* Excluding those classified as revenue in Note 5. INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 122

NOTES TO THE FINANCIAL STATEMENTS

8. STAFF COSTS

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Wages, salaries and bonus 74,119 61,834 3,337 16,183 Employees Provident Fund and social security costs 7,602 7,144 381 1,939 Short term accumulating compensated absences: - current year 708 583 8 120 - overprovision in prior year (601) (543) (120) (103) Provision for post-employment benefits (Note 30) 919 737 - - Other staff related expenses 4,149 4,170 34 71 Options granted under ESOS 5,218 7,508 510 2,402 92,114 81,433 4,150 20,612

Included in staff costs are directors’ remuneration of the Group and of the Company as further disclosed in Note 42.

9. INTEREST INCOME

The Group 2012 2011 RM’000 RM’000

Interest income from: - bank deposits 1,932 6,917 - project accounts 2,499 1,600 - others 5,566 1,649 9,997 10,166

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

10. FINANCE COSTS

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Interest expenses on: GOVERNANCE ACTIVITIES - term loans 30,256 26,543 104 1,522 - bank overdrafts 27 20 - - - other borrowings 433 1,697 124 1,300 - hire purchase 161 203 - - - redeemable convertible secured bonds (Note 27) 18,021 9,831 18,021 9,831 - advances from subsidiaries - - 17,086 8,872 48,898 38,294 35,335 21,525 Less: Interest expense capitalised in: - investment properties (Note 16) (685) (1,116) - - - development properties (Note 20) (46,011) (34,139) - - (46,696) (35,255) - - 2,202 3,039 35,335 21,525 FINANCIALS

11. INCOME TAX EXPENSE

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Estimated income tax payable: INFORMATION Current year ADDITIONAL - Local 119,951 90,092 4,917 6,566 - Foreign 677 1,828 - - Under/(Over)provision in prior years 61 (603) 1,254 (117) 120,689 91,317 6,171 6,449 Deferred tax (Note 31): Current year (37,376) (21,326) (1,895) (473)

Underprovision in prior years 442 - - - NOTICES (36,934) (21,326) (1,895) (473) Income tax expense 83,755 69,991 4,276 5,976 FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 124

NOTES TO THE FINANCIAL STATEMENTS

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

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Profit before tax 315,523 238,628 108,111 93,023 Tax at statutory tax rates of local and foreign of 25% (2011: 25%) 78,881 59,657 27,028 23,256 Tax effects of: Income exempted from tax - - (26,771) (20,464) Expenses not deductible for tax purposes 4,845 4,492 2,765 3,301 Utilisation of deferred tax assets not previously recognised (14,573) (8,335) - - Deferred tax assets not recognised 14,107 16,629 - - Reinvestment allowance utilised (8) (1,849) - - Under/(Over)provision of estimated tax payable in prior years 61 (603) 1,254 (117) Underprovision of deferred tax in prior years 442 - - - Income tax expense 83,755 69,991 4,276 5,976

12. EARNINGS PER ORDINARY SHARE

(a) Basic

The basic earnings per ordinary share for the financial year has been calculated based on the profit attributable to ordinary equity holders of the Company divided by the weighted average number of ordinary shares in issue.

The Group 2012 2011

Profit attributable to equity holders of the Company (RM’000) 230,617 168,556 Weighted average number of ordinary shares in issue (Unit’000) 835,268 831,627 Basic earnings per ordinary share (sen) 27.61 20.27

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

(b) Diluted

The diluted earnings per share has been calculated by dividing the Group’s net profit attributable to ordinary equity holders for the year by the weighted average number of ordinary shares that would have been in issue assuming full exercise of the remaining options under the ESOS and conversion of bonds, adjusted for the number of such ordinary shares that would have been issued at fair value.

The Group GOVERNANCE ACTIVITIES 2012 2011

Profit attributable to equity holders of the Company (RM’000) 230,617 168,556 Weighted average number of shares in issue (Unit’000) 835,268 831,627 Weighted average number of shares deemed issued at no consideration (Unit’000) - ESOS 10,739 14,188 - Bonds conversion 3,869 7,952 Adjusted weighted average number of ordinary shares (Unit’000) 849,876 853,767 Diluted earnings per ordinary share (sen) 27.14 19.74

13. DIVIDEND PAID/PROPOSED

The Group and The FINANCIALS Company 2012 2011 RM’000 RM’000 Recognised during the financial year: Dividends on ordinary shares - First and final dividend for 2011: 11.0 sen (2010: 7.6 sen)

per ordinary share of RM0.50 less 25% income tax, paid INFORMATION ADDITIONAL on 26 September 2012 (2010: 28 September 2011) 69,163 47,399

The Directors have proposed a first and final gross dividend of 7.6 sen per ordinary share of RM0.50 each consisting of 0.4 sen per share less income tax of 25% and single-tier dividend of 7.2 sen per share, in respect of the current financial year. The proposed first and final dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company and has not been included as a liability in the financial statements for the current financial year. Such dividend when approved by shareholders will be accounted for in equity as an appropriation of retained earnings during the financial year ending 31 December 2013. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 126

NOTES TO THE FINANCIAL STATEMENTS Plant, Furniture, machinery fittings and factory Motor and office Construction -345-21-60 -- - - (5,196) (110) (1,213) (282) - (28) - (6,691) - (138) - - - - - (4,870) (4,870) (419) - (1,890) (49) (56) (251) (2,665) 1,282 1,4615,322 25,203 2,354 - 1,914 - 4,184 36,398 - - (5,322) - 33,589 4,984 135,113 14,190 12,735 7,755 208,366 39,774 6,479 153,125 15,282 14,304 1,496 230,460 At Cost/ Valuation At Cost subsidiary (Note 18) company payment (Note 15) The Group2012Cost/valuation At 1 January Currency translation differences Arose from the acquisition of a Additions Disposals Buildings off Written RenovationsReclassification equipment to prepaid lease Transferred RM’000 vehicles equipment RM’000 in progress RM’000 Total RM’000 RM’000 RM’000 RM’000 At 31 December 14. PLANT AND EQUIPMENT PROPERTY,

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES CIIISGOVERNANCE ACTIVITIES Plant, Furniture, machinery fittings FINANCIALS and factory Motor and office Construction 3- -16 -35-8 - - (4,821) (646) (259) - (5,726) ------(95) - - - 53 (6) 47 (26) ------(121) - - - 53 (6) 47 INFORMATION ADDITIONAL (150) - (1,540) (30) (29) - (1,749) 1,344 763 7,399 2,217 1,799 - 13,522 18,828 1,171 88,360 7,372 7,257 - 122,988 20,022 1,937 89,30819,752 8,913 4,542 8,750 63,770 6,369 - 128,930 5,554 1,496 101,483 At Cost/ Valuation At Cost NOTICES subsidiary (Note18) company The Group2012 depreciation Accumulated At 1 January Currency translation differences Arose from the acquisition of a Charge for the financial year Disposals Buildings Renovations equipment RM’000 vehicles equipment RM’000 RM’000 in progress RM’000 Total RM’000 RM’000 RM’000 Written off Written At 31 December Reversal during the financial year At 31 December At 31 December Accumulated impairment loss Accumulated At 1 January Net book value FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 128

NOTES TO THE FINANCIAL STATEMENTS - (99) -- 122,988 (44) - (6) -- 111,287 1,400 -- 59 53 -- 11,435 (1,090) 7,755 208,366 7,755 85,325 - - - - (3) 22 - - - - - (6) 59 53 (61) (32) (182) (893) (15) Plant, Furniture, machinery fittings and factory Motor and office Construction - - - - 1,245 22 - (35) (12) 596 80,034 6,750 6,381 587 7,295 1,493 869 ------111 1,191 33,589 4,984 135,113 14,19018,828 12,735 1,171 88,36014,761 7,372 3,813 7,257 46,700 6,818 5,478 17,526 At Cost/ Valuation At Cost The Group2011Cost/valuation At 1 JanuaryCurrency translation differencesAdditionsDisposals - Buildings 292 Renovations - equipment RM’000 vehicles equipment 32,949 (194) RM’000 in progress (1,339) 3,077 RM’000 Total - 1,357 348 RM’000 117,966 (22) RM’000 1,942 12,441 10,983 16,045 RM’000 - RM’000 3,049 (1,555) 1,734 - 39 177,416 43 - 1,731 7,755 30,873 Accumulated impairment loss Accumulated At 1 January Written off Written At 31 December off Written At 31 December Reversal during the financial year At 31 December At 31 December Accumulated depreciation Accumulated At 1 January Currency translation differences Charge for the financial year Net book value Disposals

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Analysis of buildings

At Valuation At Cost The Group Leasehold Leasehold Freehold Total 2012 RM’000 RM’000 RM’000 RM’000

Cost/Valuation GOVERNANCE ACTIVITIES At 1 January 6,297 17,416 9,876 33,589 Currency translation differences - (419) - (419) Additions - 122 1,160 1,282 Reclassification - 5,322 - 5,322 At 31 December 6,297 22,441 11,036 39,774 Accumulated depreciation At 1 January 4,546 9,726 4,556 18,828 Currency translation differences - (150) - (150) Charge for the financial year 239 973 132 1,344 At 31 December 4,785 10,549 4,688 20,022 Net book value At 31 December 1,512 11,892 6,348 19,752 FINANCIALS 2011

Cost/Valuation At 1 January 6,297 16,776 9,876 32,949 Currency translation differences - 292 - 292 Additions - 348 - 348 INFORMATION

At 31 December 6,297 17,416 9,876 33,589 ADDITIONAL Accumulated depreciation At 1 January 4,306 8,789 4,431 17,526 Currency translation differences - 111 - 111 Charge for the financial year 240 826 125 1,191 At 31 December 4,546 9,726 4,556 18,828 Net book value

At 31 December 1,751 7,690 5,320 14,761 NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 130

NOTES TO THE FINANCIAL STATEMENTS

Furniture Office The Company and fittings equipment Total 2012 RM’000 RM’000 RM’000

Cost At 1 January 48 1,362 1,410 Additions 74 19 93 At 31 December 122 1,381 1,503 Accumulated depreciation At 1 January 21 460 481 Charge for the financial year 11 126 137 At 31 December 32 586 618 Net book value At 31 December 90 795 885

2011

Cost At 1 January 48 1,234 1,282 Additions - 128 128 At 31 December 48 1,362 1,410 Accumulated depreciation At 1 January 17 360 377 Charge for the financial year 4 100 104 At 31 December 21 460 481 Net book value At 31 December 27 902 929

Valuation

The leasehold buildings of a subsidiary company were valued in 1992 based on a valuation carried out by independent professional valuers on the open market value basis. The surplus arising from the revaluation amounting to RM2,040,529 has been credited to the revaluation reserve account and eliminated upon consolidation.

The net book values of revalued leasehold buildings of the subsidiary company that would have been included in the financial statements had these assets been carried at cost less accumulated depreciation, are as follows:

The Group 2012 2011 RM’000 RM’000

Net book value Leasehold buildings 831 963

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Assets with restricted title

At the end of the reporting period, the net book values of property, plant and equipment of the Group pledged to financial institutions as security for term loans, short-term borrowings and bank overdrafts as shown in Notes 28, 33 and 34 respectively are as follows:

The Group 2012 2011 GOVERNANCE ACTIVITIES RM’000 RM’000

Net book value Freehold buildings 4,054 4,179 Leasehold buildings 9,747 5,147 Plant, machinery and factory equipment 8,190 13,389 21,991 22,715

Assets held under finance lease and hire purchase agreements

At the end of the reporting period, the net book values of property, plant and equipment of the Group held under finance lease and hire purchase are as follows:

The Group 2012 2011 FINANCIALS RM’000 RM’000

Net book value Motor vehicles 4,943 5,485 INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 132

NOTES TO THE FINANCIAL STATEMENTS

15. PREPAID LEASE PAYMENTS

The Group 2012 2011 RM’000 RM’000

Leasehold land Cost/Valuation At 1 January 8,340 8,203 Currency translation differences (207) 137 Transferred from property, plant and equipment (Note 14) 4,870 - At 31 December 13,003 8,340 Accumulated amortisation At 1 January 5,450 5,054 Amortisation for the year (Note 7) 410 314 Currency translation differences (106) 82 At 31 December 5,754 5,450 Net book value at 31 December 7,249 2,890

The unexpired portions of the leasehold land as of 31 December 2012 are within the range of 7 to 25 years (2011: 8 to 11 years).

Certain parcels of leasehold land of the Group with a carrying value of RM1,638,021 (2011: RM2,097,404) are pledged to financial institutions to secure term loans, short-term borrowings and bank overdrafts as shown in Notes 28, 33 and 34.

16. INVESTMENT PROPERTIES

The Group 2012 2011 RM’000 RM’000

At 1 January 56,076 30,609 Additions 12,956 4,024 Gain in changes in fair value (Note 7) 2,094 - Reclassification/Transfer from property development costs (Note 20) - 21,443 At 31 December 71,126 56,076 Included in the above are: The Group 2012 2011 At fair value RM’000 RM’000

Investment properties under construction 65,816 52,860 Freehold commercial properties 5,310 3,216 71,126 56,076

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Included in additions to investment properties is interest expense capitalised during the financial year amounting to RM684,748 (2011: RM1,116,174) as shown in Note 10.

The fair value of investment properties are determined in reference to the selling price of recent transactions of similar properties of nearby location except for investment properties under construction in which its fair value is not reliably determinable, the investment properties under construction are measured at cost until either the fair value becomes reliably determinable or construction is complete, whichever is earlier. In absence of evidence of recent transactions, value in use

calculation which uses cash flow projections of rental income expected to be generated throughout the useful life periods GOVERNANCE ACTIVITIES and the terminal value of these investment properties discounted based on the average borrowing rate of the Group of 4.5% per annum was applied.

Freehold commercial properties are leased to third parties. Each of the leases contains an initial non-cancellable lease period of 1 to 3 years (2011: 1 to 3 years) (Note 40). Subsequent renewals are negotiated with the lessee and average renewal periods are for 1 to 3 years (2011: 1 to 3 years).

Rental income earned by the Group from its freehold commercial properties, all of which are leased out under operating leases amounted to RM444,422 (2011: RM204,576). Direct operating expenses incurred on the investment properties amounted to RM91,551 (2011: RM53,405).

Investment properties of the Group amounting to RM65,816,503 (2011: RM52,860,508) are pledged to a financial institution to secure term loan facilities as shown in Note 28.

17. INTANGIBLE ASSETS

License

The Group fees Goodwill Total FINANCIALS 2012 RM’000 RM’000 RM’000

Cost At 1 January 82 70 152 Arose from the acquisition of a subsidiary company (Note 18) - 12,898 12,898 At 31 December 82 12,968 13,050 INFORMATION

Accumulated amortisation ADDITIONAL At 1 January and 31 December 82 - 82 Accumulated impairment At 1 January --- Charge for the year (Note 7) - 427 427 At 31 December - 427 427 Carrying amounts At 31 December - 12,541 12,541 NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 Mahsing Group Berhad inner_Layout 1 5/28/13 11:46 AM Page 134

134

NOTES TO THE FINANCIAL STATEMENTS

License fees Goodwill Total 2011 RM’000 RM’000 RM’000

Cost At 1 January and 31 December 82 70 152 Accumulated amortisation At 1 January and 31 December 82 - 82 Carrying amounts At 31 December -7070

Goodwill arose during the year relates to a premium paid over the fair value of identifiable net assets, at the acquisition date, of a subsidiary due to the expected strong synergy value in terms of high revenue and profitability growth following development of the freehold lands owned by the subsidiary into a planned mix development township.

18. INVESTMENT IN SUBSIDIARY COMPANIES

The Company 2012 2011 RM’000 RM’000

Unquoted shares, at cost 198,326 115,785 Less: Accumulated impairment losses (9,230) (9,230) 189,096 106,555

(i) Acquisition of non-controlling interests

During the financial year, the Company acquired all the remaining ordinary shares not already owned by the Company in the following subsidiary companies:

Number of Cash ordinary shares of consideration Name of company RM1 each RM’000

Enrich Property Development Sdn Bhd 300,000 300 Vienna Home Sdn Bhd 300,000 6,000

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Details on the effects on the acquisitions of the remaining additional equity interest in existing subsidiary companies are as follows:

RM’000

Net debit balance acquired from non-controlling interests (1,188)

Premium paid on acquisition from non-controlling interests 7,488 GOVERNANCE ACTIVITIES Purchase consideration 6,300 Less: Non-cash consideration given (4,472) Net cash outflow from acquisition of balance of equity in subsidiaries 1,828 Remaining payment made arising from acquisition of balance of equity in previous year 5,000 Total net cash outflow from purchase of balance of equity in subsidiaries 6,828

(ii) Subscription for additional ordinary shares in existing subsidiary companies

During the financial year, the Company subscribed for additional ordinary shares either directly or indirectly in the following subsidiary companies:

Number of Cash ordinary shares consideration Name of company of RM1 each RM’000 FINANCIALS Semai Meranti Sdn Bhd 700,002 700 Tropika Istimewa Development Sdn Bhd 250,000 250 Tristar Acres Sdn Bhd 2,500,000 2,500 Major Land Development Sdn Bhd 2,500,000 2,500 Elite Park Development Sdn Bhd 2,500,000 2,500 Grand Prestige Development Sdn Bhd 500,002 500 INFORMATION Mah Sing Trading Sdn Bhd ADDITIONAL (formerly known as Mah Sing Components Manufacturing Sdn Bhd) 1,000,000 1,000 Mestika Bistari Sdn Bhd* 1,500,002 1,500 Venice View Development Sdn Bhd 500,002 500 Enrich Property Development Sdn Bhd 1,500,002 1,500 Vienna Home Sdn Bhd 1,500,002 1,500

Maxim Heights Sdn Bhd 500,002 500 NOTICES Capitol Avenue Development Sdn Bhd 2,500,000 2,500 Nova Century Development Sdn Bhd 1,500,002 1,500 Legend Grand Development Sdn Bhd 1,500,002 1,500

* Additional ordinary shares in Mestika Bistari Sdn Bhd was subscribed indirectly via Mah Sing Properties Sdn Bhd, the Company’s wholly-owned subsidiary. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 136

NOTES TO THE FINANCIAL STATEMENTS

(iii) Acquisition of subsidiary companies

The following subsidiary companies were acquired during the financial year:

(a) On 13 January 2012, the Company acquired the entire issued and paid-up share capital of Mah Sing Development Sdn Bhd (formerly known as Reputable Housing Development Sdn Bhd), a private limited company incorporated in Malaysia, with an authorised share capital of RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which 2 ordinary shares of RM1.00 each have been issued and fully paid-up, for a cash consideration of RM2.00.

(b) On 15 February 2012, the Company completed the acquisition of the entire issued and paid-up share capital of Semai Meranti Sdn Bhd, a private limited company incorporated in Malaysia, with an authorised share capital of RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each, of which 1,800,000 ordinary shares of RM1.00 each have been issued and fully paid-up, for a cash consideration of RM57,000,000.

(c) On 25 April 2012, the Company acquired the entire issued and paid-up share capital of Tropika Istimewa Development Sdn Bhd, a private limited company incorporated in Malaysia, with an authorised share capital of RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which 2 ordinary shares of RM1.00 each have been issued and fully paid-up, for a cash consideration of RM2.00.

(d) On 15 May 2012, the Company acquired the entire issued and paid-up share capital of Nova Indah Development Sdn Bhd, a private limited company incorporated in Malaysia, with an authorised share capital of RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which 2 ordinary shares of RM1.00 each have been issued and fully paid-up, for a cash consideration of RM2.00.

(e) On 18 May 2012, the Company acquired the entire issued and paid-up share capital of Tristar Acres Sdn Bhd, a private limited company incorporated in Malaysia, with an authorised share capital of RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which 2 ordinary shares of RM1.00 each have been issued and fully paid-up, for a cash consideration of RM2.00.

The details of the asset, liabilities and net cash outflow arising from the acquisition of a subsidiary company by the Group during the financial year are as follows:

RM’000

Goodwill (Note 17) 12,898 Property, plant and equipment (Note 14) 44 Property development costs (Note 20) 94,286 Deferred tax liability (Note 31) (15,020) Other net current liabilities (35,417) Purchase consideration 56,791 Less: Cash and bank balances acquired (33) Net cash outflow from acquisition of a subsidiary 56,758

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Details of the subsidiary companies are as follows:

Country of Effective Name of company incorporation equity interest Principal activities 2012 2011 % %

Subsidiary company of Mah Sing GOVERNANCE ACTIVITIES Group Berhad Capitol Avenue Development Sdn Bhd Malaysia 100 100 Property development Elite Park Development Sdn Bhd Malaysia 100 100 Property development Enrich Property Development Sdn Bhd Malaysia 100 70 Property development Gentali Motor Corpn. Sdn Bhd Malaysia 60.5 60.5 Inactive Golden Venice Development (MM2H) Sdn Bhd Malaysia 100 100 Promote and market Malaysia My Second Home programme and provide related services Grand Pavilion Development Sdn Bhd Malaysia 100 100 Property development Grand Prestige Development Sdn Bhd Malaysia 100 100 Property development Intramewah Development Sdn Bhd Malaysia 100 100 Property development Jastamax Sdn Bhd Malaysia 100 100 Property development Klassik Tropika Development Sdn Bhd Malaysia 100 100 Property development FINANCIALS Konsortium Lingkaran Lembah Kinta Sdn Bhd Malaysia 51 51 Dormant Legend Grand Development Sdn Bhd Malaysia 100 100 Property development Liberty Property Management Sdn Bhd Malaysia 100 100 Property management Loyal Sierra Development Sdn Bhd Malaysia 100 100 Property development Mah Sing Development Sdn Bhd (formerly known as Reputable Housing Development Sdn Bhd) Malaysia 100 - Dormant INFORMATION Mah Sing Enterprise Sdn Bhd @ Malaysia 100 100 Trading of plastic and ADDITIONAL other related products Mah Sing International (HK) Limited * Hong Kong 100 100 Investment holding Mah Sing International Ltd British Virgin 100 100 Dormant Islands Mah Sing Investment Singapore Pte Ltd * Singapore 100 100 Dormant Mah Sing Plastics Industries Sendirian Berhad @ Malaysia 100 100 Manufacture of plastic moulded products and

property development NOTICES Mah Sing Properties Sdn Bhd Malaysia 100 100 Property development and investment holding Mah Sing Trading Sdn Bhd Malaysia 100 100 Trading of building materials (formerly known as Mah Sing Components Manufacturing Sdn Bhd) FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 138

NOTES TO THE FINANCIAL STATEMENTS

Country of Effective Name of company incorporation equity interest Principal activities 2012 2011 % %

Subsidiary company of Mah Sing Group Berhad Major Land Development Sdn Bhd Malaysia 100 100 Property development Marvellous Vantage Sdn Bhd Malaysia 100 100 Property investment Maxim Heights Sdn Bhd Malaysia 100 100 Property development Multi Synergy Group Sdn Bhd Malaysia 100 100 Property development Myvilla Development Sdn Bhd Malaysia 100 100 Property development Nova Century Development Sdn Bhd Malaysia 100 100 Property development Nova Indah Development Sdn Bhd Malaysia 100 - Dormant Nova Legend Development Sdn Bhd Malaysia 100 100 Property development Oasis Garden Development Sdn Bhd Malaysia 100 100 Property development Peninsular Connection Sdn Bhd Malaysia 100 100 Inactive Pleasant Network Sdn Bhd Malaysia 100 100 Inactive Semai Meranti Sdn Bhd Malaysia 100 - Property development Sierra Peninsular Development Sdn Bhd Malaysia 100 100 Property development and property investment Star Residence Sdn Bhd Malaysia 100 100 Property development Superior Focus Sdn Bhd Malaysia 80 80 Inactive Supreme Springs Sdn Bhd Malaysia 100 100 Property development Suria Lagenda Development Sdn Bhd Malaysia 100 100 Dormant Tristar Acres Sdn Bhd Malaysia 100 - Property development Tropika Istimewa Development Sdn Bhd Malaysia 100 - Property development Uptrend Housing Development Sdn Bhd Malaysia 100 100 Property development Venice View Development Sdn Bhd Malaysia 100 100 Property development Vienna Home Sdn Bhd Malaysia 100 70 Property development Vienna View Development Sdn Bhd Malaysia 100 100 Property development Vital Roles Sdn Bhd Malaysia 90 90 Inactive Vital Routes Sdn Bhd @ Malaysia 100 100 Investment holding

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Country of Effective Name of company incorporation equity interest Principal activities 2012 2011 % %

Subsidiary company of Mah Sing Properties Sdn Bhd Acacia Springs Management Sdn Bhd Malaysia 100 100 Property management GOVERNANCE ACTIVITIES Mestika Bistari Sdn Bhd Malaysia 100 100 Property development Mestika Kenangan Sdn Bhd Malaysia 100 100 Property management MS Icon Property Services Sdn Bhd Malaysia 100 100 Property management Prima Peninsular Development Sdn Bhd Malaysia 100 100 Property management Quantum Noble Development Sdn Bhd Malaysia 100 100 Property management Subsidiary company of Pleasant Network Sdn Bhd Vican Technology Sdn Bhd ** Malaysia 68 68 Inactive Subsidiary company of Vican Technology Sdn Bhd Vican Electronics Sdn Bhd # Malaysia 68 68 Inactive Subsidiary company of Vital Routes Sdn Bhd FINANCIALS P.T. Mah Sing Indonesia *@ Indonesia 65 65 Manufacture of plastic moulded products Subsidiary company of Mah Sing International Ltd Mah Sing Vietnam Ltd British Virgin 100 100 Dormant Islands Mah Sing Vina Ltd British Virgin 100 100 Dormant Islands INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 140

NOTES TO THE FINANCIAL STATEMENTS

Country of Effective Name of company incorporation equity interest Principal activities 2012 2011 % %

Subsidiary company of Mah Sing International (HK) Limited Mah Sing Property Consulting People’s - 100 Liquidated (Changzhou) Pte Ltd *^ Republic Of China Subsidiary company of Mah Sing Plastics Industries Sendirian Berhad Kenwira Sdn Bhd Malaysia 100 100 Assembly of helmets

* Audited by other firms of auditors.

** This subsidiary company is under a court winding-up order and was deconsolidated from the Group results since financial year 2000. The cost of investment in this subsidiary company had been fully provided for.

^ The members voluntary liquidation for this subsidiary company was completed on 10 April 2012.

# This company has not been consolidated as its immediate holding company was deconsolidated from the Group.

@ Shares of these subsidiaries are pledged to a bank for loan facilities granted to the Company as disclosed in Note 28.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

19. INVESTMENT IN ASSOCIATED COMPANY

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 99 99 99 99 GOVERNANCE ACTIVITIES Less: Accumulated impairment losses (26) (26) (99) (99) Group’s share of post-acquisition accumulated losses (73) (73) ------

The Group’s share in the accumulated losses of associated company ceased when the Group’s share of losses of associated company exceeded the carrying amount of its investment in the associated company.

Details of associated company is as follows:

Country of Effective Name of company incorporation equity interest Principal activities 2012 2011 % % Prestige Greenery Sdn Bhd * Malaysia 39.5 39.5 Dormant

* Audited by other firms of auditors. FINANCIALS

20. PROPERTY DEVELOPMENT ACTIVITIES

(a) Land held for property development

The Group

2012 2011 INFORMATION ADDITIONAL RM’000 RM’000

At cost: At 1 January 71,869 62,889 Additions 365,848 8,980 Transfer to property development costs (18,437) - 419,280 71,869 NOTICES

Freehold land of RM71,869,375 (2011: RM71,869,375) is charged as security for the redeemable convertible secured bonds as shown in Note 27. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 142

NOTES TO THE FINANCIAL STATEMENTS

(b) Property development costs

The Group 2012 2011 RM’000 RM’000

At 1 January Land costs 1,137,426 940,427 Development costs 398,671 311,402 1,536,097 1,251,829 Costs incurred during the financial year: Land costs 195,844 449,790 Development costs 1,092,623 832,280 1,288,467 1,282,070 Transfer from land held for property development: Land costs 18,437 - Arose from acquisition of a subsidiary company: Land costs (Note 18) 90,578 - Development costs (Note 18) 3,708 - 94,286 - Costs recognised as expense in the income statements during the financial year: Land costs (213,502) (232,477) Development costs (838,468) (728,411) (1,051,970) (960,888) Reclassification/Transfer to: Investment properties - Land costs (Note 16) - (18,415) - Development costs (Note 16) - (3,028) Inventories - Land costs (19) (1,899) - Development costs (65) (13,572) (84) (36,914) At 31 December Land costs 1,228,764 1,137,426 Development costs 656,469 398,671 1,885,233 1,536,097

Included in development costs are interests on borrowings capitalised during the financial year amounting to RM46,011,471 (2011: RM34,139,374) as shown in Note 10.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

On 18 October 2012, the Group via its wholly-owned subsidiary company entered into a Lease Purchase Agreement with an independent third party (“Landowner”) for the lease purchase of 2 parcels of leasehold land measuring approximately 90,083 and 108,780 square metres respectively located at Mukim Pulai, District of Johor Bahru, State of Johor.

The title deeds in respect of certain lands totaling to RM99,093,978 (2011: RM48,645,965) are not registered under the subsidiary companies’ names as these title deeds will be transferred directly to purchasers upon completion of the properties.

Freehold and leasehold land of RM661,554,272 (2011: RM695,569,452) and RM269,212,729 (2011: RM292,240,415) GOVERNANCE ACTIVITIES respectively are pledged to certain financial institutions as securities for term loans and short-term borrowings of the Group as shown in Notes 28 and 33 respectively.

21. INVENTORIES

The Group 2012 2011 RM’000 RM’000

At cost: Completed properties 14,802 26,657 Raw materials 15,808 9,416 Work-in-progress 1,004 1,169 Finished goods 10,338 8,145 FINANCIALS 41,952 45,387 Allowance for slow-moving inventories: - completed properties (739) (500) - raw materials (998) (616) - finished goods (493) (490) (2,230) (1,606) INFORMATION

39,722 43,781 ADDITIONAL

Inventories of a subsidiary company amounting to RM2,959,452 (2011: RM5,597,402) are pledged to financial institutions as security for foreign term loans, short-term borrowings and bank overdrafts as shown in Notes 28, 33 and 34.

Completed properties of a subsidiary company amounting to RM3,754,369 (2011: RM3,754,369) are pledged to financial institutions as securities for term loans of the Company as shown in Note 28. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 144

NOTES TO THE FINANCIAL STATEMENTS

22. TRADE AND OTHER RECEIVABLES

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Trade receivables 302,428 200,638 - - Less: Allowance for doubtful debts (989) (1,125) - - 301,439 199,513 - - Other receivables 14,073 15,940 10,684 10,747 Less: Allowance for doubtful debts (11,492) (11,492) (10,261) (10,261) 2,581 4,448 423 486 Accrued billings for property development 63,455 119,538 - - Amounts due from subsidiary companies - - 833,458 783,650 Less: Allowance for doubtful debts (Note 7) - - (85) - - - 833,373 783,650 Deposits for land acquisitions/joint development/acquisition of equity interests 6,396 12,096 - 5,700 Deposits for purchase of property, plant and equipment 6,981 7,345 - - Other deposits 13,946 11,722 1,283 84 Prepayments 3,233 908 - - 398,031 355,570 835,079 789,920

The currency exposure profile of trade receivables is as follows:

The Group 2012 2011 RM’000 RM’000

Ringgit Malaysia 281,125 177,568 Indonesian Rupiah 13,907 19,085 United States Dollar 6,164 3,150 Singapore Dollar 896 812 Australian Dollar 336 23 302,428 200,638

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

The currency exposure profile of other receivables is as follows:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 14,007 15,462 10,684 10,747 GOVERNANCE ACTIVITIES United States Dollar 39 - - - Indonesian Rupiah 27 478 - - 14,073 15,940 10,684 10,747

Trade receivables of the Group amounting to RM6,851,205 (2011: RM20,005,072) are pledged to financial institutions as securities for foreign term loans and bank overdrafts as shown in Notes 28 and 34.

Trade receivables comprise amounts receivable for the sale of goods of RM37,179,428 (2011: RM37,987,726) and amounts receivable from customers for property development projects of RM264,259,816 (2011: RM161,525,512).

The terms for sale of goods range from payment in advance to 90 days credit whilst the credit terms for receivables from property development is 14 to 21 days (2011: 14 to 21 days).

Ageing analysis of trade receivables

The Group FINANCIALS 2012 2011 RM’000 RM’000

Trade receivables not past due 120,533 101,456 Retention sums receivable 94,784 31,772 Past due < 2 months 51,609 44,645 INFORMATION

Past due 2 - 4 months 15,395 10,991 ADDITIONAL Past due > 4 months 19,118 10,649 301,439 199,513 Impaired trade receivables Past due > 4 months 989 1,125 302,428 200,638

Retention sums receivable are trade receivables retained by stakeholders that are due upon expiry of retention periods ranging NOTICES from 8 to 24 months (2011: 6 to 24 months) as stipulated in the sale and purchase agreements. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 146

NOTES TO THE FINANCIAL STATEMENTS

Movement in allowance for doubtful debts - trade receivables

The Group 2012 2011 RM’000 RM’000

At 1 January 1,125 1,049 Allowance during the year (Note 7) 4 76 Reversal of allowance (Note 7) (136) - Written off (4) - At 31 December 989 1,125

Movement of allowance for doubtful debts-other receivables

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

At 1 January and 31 December 11,492 11,492 10,261 10,261

During the financial year, trade receivables of the Group amounting to RM4,000 (2011: Nil) was written off against allowance for doubtful debts.

Concentration of credit risk with respect to trade receivables is limited due to the Group’s large number of customers, which are widely distributed and covers a broad range of end markets. The Group’s historical experience in collection of accounts receivable falls within the recorded allowances. Due to these factors, the management believes there is no additional credit risk beyond amounts provided for doubtful debts for the Group’s trade receivables.

Included in other receivables of the Company is an amount of RM8,053,077 (2011: RM8,053,077) owing by indirect subsidiary companies, Vican Technology Sdn Bhd and Vican Electronics Sdn Bhd, which had been excluded from consolidation as explained in Note 18. The amount owing by the said subsidiary companies has been fully provided for.

Amounts due from subsidiary companies, which arose mainly from intercompany advances and payments on behalf, are unsecured, repayable on demand and interest free except for advances amounting to RM728,399,583 (2011: RM602,168,034) and RM101,229,289 (2011: RM44,060,445), which bear interest at 3% (2011: 3%) and 6.66% (2011: 10%) per annum respectively.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

23. DEPOSITS, CASH AND BANK BALANCES

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Cash and bank balances 19,795 24,230 270 311 GOVERNANCE ACTIVITIES Project accounts 277,826 133,001 - - Deposits with licensed banks 291,839 508,486 239,488 380,702 589,460 665,717 239,758 381,013

The interest rates per annum during the financial year are as follows:

The Group The Company 2012 2011 2012 2011 % % % %

Project accounts 1.20 - 2.05 1.00 - 2.50 - - Deposits with licensed banks 2.00 - 3.50 1.50 - 3.55 2.86 - 3.50 2.60 - 3.40

Project accounts are bank accounts maintained in accordance with Section 7A of the Housing Developers Act, 1966. These FINANCIALS accounts, which consist of monies received from purchasers, are for the payment of property development expenditure incurred. The surplus monies, if any, will be released to the respective subsidiary companies upon the completion of the property development projects and after all property development expenditure have been fully settled.

Deposits with licensed banks of the Group and of the Company have an average maturity of 43 days (2011: 19 days) and 23 days (2011: 18 days) respectively.

Deposits with licensed banks of the Group amounting to RM37,248,555 (2011: RM28,507,449) has been pledged as collateral INFORMATION

for the redeemable convertible secured bonds as shown in Note 27. ADDITIONAL

Deposits with licensed banks of the Group amounting to RM7,393,492 (2011: RM2,844,657) have been deposited in Escrow Accounts for banking facilities of subsidiary companies.

The currency exposure profile of deposits, cash and bank balances is as follows:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 NOTICES

Ringgit Malaysia 587,094 565,202 239,758 381,013 United States Dollar 2,168 97,394 - - Indonesian Rupiah 185 3,109 - - Others 13 12 - - 589,460 665,717 239,758 381,013 FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 148

NOTES TO THE FINANCIAL STATEMENTS

24. SHARE CAPITAL

The Group and The Company Number of shares Par value Unit’000 RM RM’000

Ordinary shares Authorised: 2012 At 1 January and 31 December 2,000,000 0.50 1,000,000 2011 At 1 January and 31 December 2,000,000 0.50 1,000,000

Issued and paid up: 2012 At 1 January 831,872 0.50 415,936 Exercise of ESOS 7,996 0.50 3,998 At 31 December 839,868 0.50 419,934 2011 At 1 January 831,569 0.50 415,784 Exercise of ESOS 303 0.50 152 At 31 December 831,872 0.50 415,936

During the financial year, the issued and paid-up share capital of the Company was increased from RM415,936,070 to RM419,933,655 by way of issuance of 8,051 and 7,987,120 new ordinary shares of RM0.50 each at an exercise price of RM0.64 and RM1.65 respectively pursuant to exercise of employees share options. The resulting premium arising from the shares issued of RM9,186,315 has been credited to the share premium account.

The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.

Employees’ Share Option Scheme

The salient features of the ESOS are inter alia as follows:

(a) The ESOS was implemented on 12 July 2004 and was in force for a period of 5 years (“Initial Period”). On 10 July 2009, the ESOS was extended for another 5 years up to 10 July 2014 in accordance with the terms of the ESOS By-Laws;

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

(d) The price payable upon exercise of an Option shall be based on the weighted average market price of the Company’s shares as shown in the Daily Official List of the Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of offer with an allowance of a discount of not more than 10%, or at the par value of the Company’s

share, whichever is higher; GOVERNANCE ACTIVITIES

(i) not more than fifty per cent (50%) of the new shares available under the Scheme should be allocated, in aggregate, to the Executive Directors and senior management of the Group; and

(ii) not more than ten per cent (10%) of the new shares available under the Scheme should be allocated to any eligible employee, who either singly or collectively through his or her associates, holds twenty per cent (20%) or more in the issued and paid-up capital of the Company.

(g) The exercise price and the number of new ordinary shares comprised in the Options are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions in the By-Laws. However, no FINANCIALS adjustment shall be made in any event whereby the exercise price would be reduced to below the par value of ordinary share in the Company.

The number and movements in the Company’s Options are as follows:

Number of options over ordinary shares of RM0.50 each

2012 Unit’000 INFORMATION ADDITIONAL

At 1 January 48,384 Granted 13,257 Exercised (7,995) Lapsed (2,829) At 31 December 50,817 NOTICES 2011 At 1 January 51,451 Granted - Exercised (303) Lapsed (2,764) At 31 December 48,384 FORM OF PROXY Further details of the ESOS are set out in Note 25.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 150

NOTES TO THE FINANCIAL STATEMENTS

25. RESERVES

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Share premium 140,287 131,101 140,287 131,101 Equity-settled employees benefit reserve 10,614 8,451 10,614 8,451 Exchange fluctuation reserve 3,146 3,768 - - Equity component of redeemable convertible bonds 17,129 17,129 17,129 17,129 171,176 160,449 168,030 156,681

Share premium

Share premium arose from exercise of ESOS, private placement and other issuance of shares in prior years.

Equity-settled employees benefit reserve

Equity-settled employees benefit reserve represents the fair value of the employee services received in exchange for the grant of options which is recognised in equity with a corresponding charge to income statements when vested.

Details of share option movement during the financial year is as follows:

Exercise Number of options over ordinary shares of RM0.50 each price (Unit’000) Offer Date RM At 1.1.2012 Granted Exercised Lapsed At 31.12.2012

9 Jun 2006 0.64 51 - (8) - 43 25 Nov 2010 1.65 47,728 - (7,847) (2,297) 37,584 6 Dec 2010 1.65 605 - (140) - 465 30 July 2012 1.92 - 13,257 - (532) 12,725 48,384 13,257 (7,995) (2,829) 50,817

A new option was granted on 30 July 2012 with an estimated fair value of 32.10 sen per option. The option outstanding at the end of the financial year has a remaining contractual life of approximately 1.8 years. No new option was granted during the prior financial year.

The number of granted options which are exercisable by the employees within a specified period are tied to the Group’s achievement of its internal target profit after tax and subject to the approval of Option Committee.

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

The fair values were calculated using the Black-Scholes Pricing Model. The inputs into the model were as follows:

Options granted on 30 July 2012

Share price RM2.11

Exercise price RM1.92 GOVERNANCE ACTIVITIES Expected volatility 26.35% Expected life (days to expiry) 709 Risk free rate 2.987% Expected dividend yield 5.21%

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome. The expected life used is based on management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Group and the Company recognised total fair value in the income statements for the above new option granted of RM1,206,434 during the financial year.

Exchange fluctuation reserve

Exchange differences arising from translation of the financial statements of foreign operations are taken to the exchange fluctuation reserve account as disclosed in the accounting policies. FINANCIALS Equity component of redeemable convertible bonds

The equity component of redeemable convertible bonds represents the residual amount of the redeemable convertible bonds after deducting the fair value of the liability component. This amount is presented net of transaction costs and deferred tax liability. Details of the redeemable convertible bonds are set out in Note 27.

26. RETAINED EARNINGS INFORMATION ADDITIONAL The Company

As of the reporting date, the Company has not elected for the irrevocable option in accordance with the Finance Act 2007 to disregard the Section 108 tax credits. Therefore, the Company is allowed to continue utilising its available Section 108 tax credits for the purpose of dividend distribution until such time the credits are fully utilised or upon expiry of the transitional period on 31 December 2013, whichever is earlier.

As at 31 December 2012, subject to agreement with the Inland Revenue Board, the Company has sufficient Section 108 tax credit to pay franked dividends out of the retained earnings of the Company to the extent of approximately RM8,255,000 (2011: RM77,418,000). In addition, the Company has tax exempt income of approximately RM20,564,000 NOTICES (2011: RM18,684,000) for future distribution of tax exempt dividends. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 152

NOTES TO THE FINANCIAL STATEMENTS

27. REDEEMABLE CONVERTIBLE SECURED BONDS

On 10 June 2011, the Company issued a 7-year RM325 million nominal value of 3.25% redeemable convertible secured bonds (“the Bonds”). The salient features of the Bonds are inter-alia as follows:

(i) The Bonds may be redeemed on the 5th anniversary of the issue date (10 June 2016) in whole or in part by cash and in one lump sum at par;

(ii) All or any part of the Bonds are convertible at a conversion price of RM2.09, into fully paid new shares of the Company at any time between issuance up to the maturity date;

(iii) Unless previously redeemed, converted, purchased and cancelled, the Bonds will be redeemed on the maturity date on 8 June 2018 by cash and in one lump sum at par;

(iv) Coupon is at 3.25% per annum based on the nominal value of Bonds outstanding and is payable semi-annually in arrears; and

(v) The Bonds are secured by inter-alia, legal charges over development land of the Group and deposits with licensed bank as disclosed in Notes 20 and 23 to the financial statements.

The liability component of the redeemable convertible secured bonds is recognised in the statements of financial position as follows:-

The Group and The Company 2012 2011 RM’000 RM’000

At 1 January 268,298 - Proceeds from issuance of Bonds - 289,478 Equity component, net of deferred tax liability - (17,129) Deferred tax liability (Note 31) - (5,783) Bonds issue expenses - (2,745) Liability component at subsequent measurement/on initial recognition 268,298 263,281 Interest expense (Note 10) 18,021 9,831 Interest paid (10,534) (5,354) At 31 December 275,785 268,298

Interest expense on the Bond is calculated based on the effective interest method by applying the interest rate of 6.5% per annum for an equivalent non-convertible bond of comparable credit status to the liability component of the convertible bonds.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

28. TERM LOANS

The Group The Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000

Secured GOVERNANCE ACTIVITIES Term loans (a) 603,837 687,959 - 8,211 Bridging loans (b) 2,600 6,881 - - Foreign term loans (c) 12,638 6,649 - - 619,075 701,489 - 8,211

The terms loans are repayable as follows:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Current: Repayable not later than 1 year 28,675 34,981 - 8,211

Non-current: FINANCIALS Repayable later than 1 year and not later than 2 years 185,235 91,253 - - Repayable later than 2 years and not later than 5 years 405,165 525,007 - - Repayable later than 5 years - 50,248 - - 590,400 666,508 - - 619,075 701,489 - 8,211 INFORMATION ADDITIONAL (a) Term Loans

The Group

As of 31 December 2012, the Group has term loans facilities from local licensed banks of RM1,304,742,371 (2011: RM953,961,234).

The term loans are secured by way of legal charges, specific debenture and general debenture over the development land, completed properties and investment properties and pledge of shares of certain subsidiary companies and are

guaranteed by the Company. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 154

NOTES TO THE FINANCIAL STATEMENTS

The Company

As of 31 December 2011, the Company had term loans facilities from local licensed banks of RM50,000,000. The term loans had been fully repaid during the financial year.

The term loans were secured by way of pledge of shares of certain subsidiary companies and legal charges over completed properties of a subsidiary company as disclosed in Notes 18 and 21.

(b) Bridging Loans

As of 31 December 2012, the Group has bridging loans facilities from local licensed banks of RM86,000,000 (2011: RM32,900,000).

The bridging loans are secured by way of legal charges, specific debenture and general debenture over the development land of its subsidiary companies and are guaranteed by the Company.

As of 31 December 2012, a foreign subsidiary has foreign term loan facilities obtained from foreign licensed banks of RM18,484,079 (2011: RM20,557,089).

The foreign term loans are secured by way of legal charges over certain property, plant and equipment, prepaid leasehold land, inventories and assignment over trade receivables of the subsidiary company.

The currency exposure profile of the term loans is as follows:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 606,437 694,840 - 8,211 Indonesian Rupiah 12,638 6,649 - - 619,075 701,489 - 8,211

During the financial year, the interest rates were in the following range:

The Group The Company 2012 2011 2012 2011 % % % %

Local currency 4.3 - 5.1 3.1- 7.5 4.9 - 5.0 4.7 - 5.0 Foreign currency: Indonesian Rupiah 10.5 - 12.0 10.5 - 12.0 - -

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

29. LONG-TERM AND DEFERRED PAYABLES

The Group 2012 2011 RM’000 RM’000

Finance lease and hire purchase liabilities (i) 2,439 2,521 GOVERNANCE ACTIVITIES Deferred payables (ii) 52,109 7,015 Retirement benefit obligations (Note 30) 3,426 2,828 57,974 12,364

The Group 2012 2011 RM’000 RM’000

(i) Finance lease and hire purchase liabilities Minimum finance lease and hire purchase payments: - not later than 1 year 1,311 1,280 - later than 1 year and not later than 5 years 2,615 2,719 3,926 3,999 FINANCIALS Future finance charges on finance lease and hire purchase liabilities (313) (341) Principal of finance lease and hire purchase liabilities 3,613 3,658 Principal of finance lease and hire purchase liabilities: - not later than 1 year (Note 32) 1,174 1,137 - later than 1 year and not later than 5 years 2,439 2,521 3,613 3,658 INFORMATION ADDITIONAL

The average term for finance lease and hire-purchase is 5 years (2011: 3 to 5 years). For the financial year ended 31 December 2012, the average effective borrowing rate was 2.63% (2011: 2.70%) per annum. Interest rates are fixed at the inception of the hire-purchase arrangements.

The finance lease and hire purchase liabilities are secured by assets acquired under finance lease and hire purchase agreements as disclosed under Note 14. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 156

NOTES TO THE FINANCIAL STATEMENTS

The Group 2012 2011 RM’000 RM’000

(ii) Deferred payables at amortised cost - not later than 1 year (Note 32) 26,075 5,852 - later than 1 year and not later than 5 years 52,109 7,015 78,184 12,867

Included in the deferred payables shown above are payables for acquisition of joint developments on lands of RM72,641,979 (2011: Nil) and development charges of RM5,541,567 (2011: RM12,867,038) made under deferred payment terms. These deferred payables are measured at amortised costs at an imputed interest of 4.5% (2011: 4.5%) per annum.

30. RETIREMENT BENEFIT OBLIGATIONS

A foreign subsidiary operates an unfunded defined retirement benefit scheme (“the Scheme”) for its eligible employees.

The amounts recognised in the statement of financial position are determined as follows:

The Group 2012 2011 RM’000 RM’000

Present value of obligations 4,773 4,406 Unrecognised actuarial losses (1,245) (1,457) Unrecognised past service cost – non-vested (102) (121) Retirement benefits obligations (Note 29) 3,426 2,828

The amounts recognised in the income statements are as follows:

The Group 2012 2011 RM’000 RM’000

Current service cost 552 452 Interest on obligation 279 245 Net actuarial losses recognised in financial year 81 33 Amortisation of past service cost – non-vested 7 7 Total included in staff cost (Note 8) 919 737

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Movements in the net liability in the current financial year are as follows:

The Group 2012 2011 RM’000 RM’000

At 1 January 2,828 2,016 GOVERNANCE ACTIVITIES Currency translation differences (291) 85 Benefit paid (30) (10) Net amounts recognised in the income statements (Note 7) 919 737 At 31 December 3,426 2,828

Principal actuarial assumptions used: The Group 2012 2011 % %

Discount rate 6.0 7.0 Expected rate of salary increase 10.0 10.0 FINANCIALS 31. DEFERRED TAX LIABILITIES/(ASSETS)

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

At 1 January (20,569) (5,026) 5,507 197 INFORMATION

Arose from issuance of convertible ADDITIONAL bonds and recognised in equity (Note 27) - 5,783 - 5,783 Arose from the acquisition of a subsidiary company (Note 18) 15,020 - - - Recognised in income statements (Note 11) (36,934) (21,326) (1,895) (473) At 31 December (42,483) (20,569) 3,612 5,507

Deferred tax assets and liabilities are offset when there is legally enforceable right to set-off current tax assets and current

tax liabilities and when the deferred taxes relate to the same tax authority. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 158

NOTES TO THE FINANCIAL STATEMENTS

The following amounts, presented after appropriate offsetting, are shown in the statement of financial position:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Deferred tax assets-net (64,456) (27,457) - - Deferred tax liabilities-net 21,973 6,888 3,612 5,507 (42,483) (20,569) 3,612 5,507

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

Deferred tax liabilities

Property, Property Redeemable plant and development convertible equipment cost bonds Offsetting Total The Group RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011 4,031 - - (2,193) 1,838 Arose from issuance of bonds (Note 27) - - 5,783 - 5,783 Recognised in income statements 564 - (488) (809) (733) At 31 December 2011/1 January 2012 4,595 - 5,295 (3,002) 6,888 Arose from the acquisition of a subsidiary (Note 18) - 15,020 - - 15,020 Recognised in income statements 2,538 (457) (1,868) (148) 65 At 31 December 2012 7,133 14,563 3,427 (3,150) 21,973

Deferred tax assets

Unabsorbed capital allowances Other Property and deductible development Unused tax reinvestment temporary costs losses allowances differences Offsetting Total The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011 - (7,695) (1,071) (291) 2,193 (6,864) Recognised in income statements (9,006) (9,257) (1,305) (1,834) 809 (20,593) At 31 December 2011/1 January 2012 (9,006) (16,952) (2,376) (2,125) 3,002 (27,457) Recognised in income statements (43,235) 7,348 185 (1,445) 148 (36,999) At 31 December 2012 (52,241) (9,604) (2,191) (3,570) 3,150 (64,456)

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Deferred tax liabilities

Property, Redeemable plant and convertible equipment bonds Total The Company RM’000 RM’000 RM’000

At 1 January 2011 197 - 197 GOVERNANCE ACTIVITIES Arose from issuance of bonds (Note 27) - 5,783 5,783 Recognised in income statements 15 (488) (473) At 31 December 2011/1 January 2012 212 5,295 5,507 Recognised in income statements (27) (1,868) (1,895) At 31 December 2012 185 3,427 3,612

Details of deductible temporary differences, unused tax losses and unused tax credits pertaining to certain subsidiary companies which have not been recognised in the financial statements due to uncertainty of realisation are as follows:

The Group 2012 2011 RM’000 RM’000

Deductible temporary differences 137,464 144,608 FINANCIALS Unutilised tax losses 18,339 12,514 Unabsorbed capital allowances 1,465 2,011 157,268 159,133

The unused tax losses and unabsorbed capital allowances are available for offset against future taxable profits of the subsidiary companies, subject to the agreement by the tax authorities. INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 160

NOTES TO THE FINANCIAL STATEMENTS

32. TRADE AND OTHER PAYABLES

The Group The Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000

Trade payables (i) 256,583 193,041 - - Payable for acquisition of development land 326,502 6,440 - - Retention sum 122,302 90,330 - - Other payables (ii) 72,108 38,053 2,132 5,271 777,495 327,864 2,132 5,271 Progress billings for property development 331,444 252,190 - - Finance lease and hire purchase liabilities (Note 29) 1,174 1,137 - - Amounts due to subsidiary companies (iii) - - 255,766 310,529 Amount due to non-controlling shareholders of subsidiary companies (iv) 714 3,524 - - Payable for acquisition of property, plant and equipment (v) 6,793 6,972 84 84 Provision for future operating lease commitment (Note 40) (vi) 4,889 11,800 - - Advances received from customers 21,805 - - - Deposits received from customers 24,906 33,191 - - Provision for affordable housing obligations (vii) 102,647 55,589 - - Accrued operating expenses 42,561 43,970 3,279 10,917 1,314,428 736,237 261,261 326,801

(i) The credit terms for trade payables of the Group range from cash basis to 90 days (2011: cash basis to 90 days).

(ii) Included in other payables of the Group and of the Company is an amount of RM1,946,693 (2011: RM5,000,000) due to former non-controlling shareholder of a subsidiary company, which represents remaining amount payable for acquiring the interest of the former non-controlling shareholder in the said subsidiary company. Also included in other payables of the Group are payables for acquisition of joint developments on lands and development charges made under deferred payment terms amounting to RM26,075,390 (2011: RM5,851,983) mentioned in Note 29.

(iii) Amounts due to subsidiary companies arose mainly from inter-company advances and payments on behalf. They are unsecured, interest free and repayable on demand except for an amount of RM253,128,923 (2011: RM310,529,442) which bears interest at 3% (2011: 3%) per annum. During the financial year, interest expense amounting to RM17,085,381 (2011: RM8,872,327) has been recognised in the income statements of the Company.

(iv) Amount due to non-controlling shareholders of subsidiary companies are unsecured, interest free and have no fixed terms of repayment except for an amount of RM714,153 (2011: RM1,204,651) which bears interest at rates varying between 0.28% to 0.45% (2011: 0.17% to 0.68%) per annum. During the financial year, interest expense amounting to RM3,370 (2011: RM5,407) has been recognised in the income statements of the Group.

(v) Included in amounts payable for acquisition of property, plant and equipment is an amount of RM5,543,105 denominated in United States Dollar and RM600,000 denominated in Japanese Yen (2011: RM6,284,720 denominated in United States Dollar) which is interest-free.

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

(vi) The provision for future operating lease commitment relates to en-bloc sale of a commercial building in 2009 and the Leaseback and Guarantee Rental Return Agreement entered into with the purchaser. Estimated lease commitments are based on the terms of the leaseback agreement. The leaseback commenced in September 2011 and shall expire by August 2013. The remaining lease commitments not provided for are expected to be off-setted with increasing rental income from sub-lease of properties, and are disclosed in Note 40.

The movement on the provision for future operating lease commitment is as follows: CIIISGOVERNANCE ACTIVITIES The Group 2012 2011 RM’000 RM’000

At 1 January 11,800 - Provision made during the year (Note 7) 1,636 11,800 Utilisation of provision during the year (8,547) - At 31 December 4,889 11,800

(vii) The Malaysian Institute of Accountants (MIA) issued Financial Reporting Standards Implementation Committee (“FRSIC”) Consensus 17 on Development of Affordable Housing on 24 November 2011. It recommends that the estimate amount of shortfall relating to affordable housing obligation be recognised as a provision. The recognition of provision would result in the recognition of a corresponding asset in the form of common costs in the development of premium housing as included under Note 20 on Property Development Costs.

The movement on the provision for affordable housing obligations is as follows: FINANCIALS

The Group 2012 2011 RM’000 RM’000

At 1 January 55,589 57,503

Provision made during the year 57,130 - INFORMATION ADDITIONAL Utilisation and reversal of provision during the year (10,072) (1,914) At 31 December 102,647 55,589

The currency exposure profile of trade and other payables, including retention sum and payables for acquisition of joint developments on lands are as follows:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 NOTICES

Ringgit Malaysia 761,421 304,280 2,132 5,271 United States Dollar 10,154 18,155 - - Indonesian Rupiah 5,575 4,249 - - Singapore Dollar - 767 - - Others 345 413 - - FORM OF

777,495 327,864 2,132 5,271 PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 162

NOTES TO THE FINANCIAL STATEMENTS

33. SHORT-TERM BORROWINGS

The Group 2012 2011 RM’000 RM’000

Secured: Foreign revolving credits 5,425 2,542 Local revolving credits 3,450 - Local bankers acceptances 2,430 1,480 Total 11,305 4,022

The Group

As of 31 December 2012, the Group has secured local revolving credit facilities from licensed banks of RM20,000,000 (2011: RM12,500,000).

The secured local revolving credit facilities are granted on legal charges over a piece of commercial land of a subsidiary company and are guaranteed by the Company.

The secured local bankers acceptances are granted on negative pledges over the present and future assets of certain subsidiary companies and are guaranteed by the Company.

The secured foreign revolving credit facilities obtained from foreign licensed banks totaling RM5,762,998 (2011: RM8,439,726) by a subsidiary company are secured by legal charges over leasehold land and buildings, plant, machinery and equipment, inventories and trade receivables of the said subsidiary company.

The borrowings bear interest at floating rates and their fair values approximate their carrying values at reporting date.

The Company

As of 31 December 2012, the Company has revolving credit facilities of RM6,000,000 (2011: RM6,000,000) obtained from local licensed bank. The facility is secured by a legal charge over a piece of commercial land of a subsidiary company.

During the financial year, the interest rates were in the following range:

The Group The Company 2012 2011 2012 2011 % % % %

Local revolving credits 4.45 - 4.90 4.15 - 4.65 - 4.15 - 4.65 Local bankers acceptances 3.62 - 3.98 3.40 - 3.77 - - Foreign revolving credits: United States Dollar 6.50 6.50 - - Indonesian Rupiah 10.50 11.00 - 12.00 - -

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

34. BANK OVERDRAFTS

The Group 2012 2011 RM’000 RM’000

Secured Foreign - Indonesian Rupiah 519 150 GOVERNANCE ACTIVITIES

The bank overdrafts bear interest at 10.5% (2011: 11%) per annum.

As of 31 December 2012, the Group has secured overdraft facilities from local and foreign licensed banks of RM7,950,000 (2011: RM4,500,000) and RM629,996 (2011: RM700,649) respectively.

The foreign bank overdrafts are secured by legal charges over certain property, plant and equipment, prepaid leasehold land, inventories and assignment over trade receivables of a subsidiary company.

35. CASH AND CASH EQUIVALENTS

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 FINANCIALS Cash and bank balances 19,795 24,230 270 311 Project accounts 277,826 133,001 - - Deposits with licensed banks 291,839 508,486 239,488 380,702 Bank overdrafts (519) (150) - - 588,941 665,567 239,758 381,013 Less: Deposits pledged as collateral (37,774) (28,507) - - INFORMATION Deposits in Escrow Account (7,393) (2,845) - - ADDITIONAL 543,774 634,215 239,758 381,013

36. CONTINGENT LIABILITIES

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 NOTICES Corporate guarantees issued to financial institutions for credit facilities granted to subsidiary companies - - 1,587,450 1,191,112 Corporate guarantees issued to third parties 6,000 - 6,000 - Bank guarantees issued to third parties 8,241 6,200 - - Others 707 - - - FORM OF

14,948 6,200 1,593,450 1,191,112 PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 164

NOTES TO THE FINANCIAL STATEMENTS

37. MATERIAL LITIGATION

The Group is not engaged in any material litigation, other than in the ordinary course of business, certain companies within the Group are defendants in various legal actions for breach of contracts and claims for services rendered which have no material impact. In the opinion of the Directors, after taking appropriate legal advice, the outcomes of such actions are remote and therefore, no provisions have been made in the financial statements.

38. CAPITAL RISK MANAGEMENT, FINANCIAL INSTRUMENTS AND FINANCIAL RISKS

Capital Management

The primary objective of the Group’s capital management is to ensure that it maintains a healthy and optimal capital base in order to maintain investors, creditors and market confidence and to sustain future development of the business so that it can continue to maximise returns for shareholders and benefits for other stakeholders. The capital structure of the Group and the Company comprises of net debt (borrowings offset by deposit, cash and bank balances as detailed in Notes 23, 27, 28, 33, 34 and 35 respectively) and equity (comprising issued capital, reserves and non-controlling interests as detailed in Notes 24 to 26).

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristic of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or reduce borrowings. No changes were made in the objectives, policies or processes during the year ended 31 December 2012.

Net Gearing Ratio

The net gearing ratio at the end of the reporting period is as follows:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Total borrowings 910,297 977,617 275,785 276,509 Less: Deposit, cash and bank balances (589,460) (665,717) (239,758) (381,013) Net debt/(Net cash) 320,837 311,900 36,027 (104,504) Total equity 1,255,001 1,088,489 725,910 672,836 Net debt-to-equity ratio 0.26 0.29 0.05 -

Categories of Financial Instruments

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Financial assets Loans and receivables: Trade and other receivables 321,199 216,591 835,079 789,920 Deposits, cash and bank balances 589,460 665,717 239,758 381,013

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Financial liabilities At amortised costs: CIIISGOVERNANCE ACTIVITIES Trade and other payables 830,832 427,321 261,261 326,801 Redeemable convertible secured bonds 275,785 268,298 275,785 268,298 Loans and borrowings 634,512 709,319 - 8,211 Long-term and deferred payables 52,109 7,015 - -

Financial Risk Management Objectives and Policies

The operations of the Group are subject to a variety of financial risks, including market risk (which include foreign currency risk and interest rate risk), credit risk, liquidity and cash flow risk.

The Group has formulated a financial risk management framework whose principal objective is to minimise the Group’s exposure to risks and/or costs associated with the financing, investing and operating activities of the Group.

Financial risk management is carried out through risk reviews, internal control systems and adherence to Group financial risk management policies. The Board regularly reviews these risks and approves the treasury policies, which cover the management of these risks. FINANCIALS

Foreign currency risk management

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group is exposed to foreign exchange rate risk as certain transactions are entered into by subsidiaries in currencies other than their functional currency. INFORMATION ADDITIONAL Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Change in Group Profit currency rate after tax 2012 % RM’000 NOTICES Rp/USD -3.0 +224 Rp/USD +3.0 -224 USD/RMB -3.0 - USD/RMB +3.0 - FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 166

NOTES TO THE FINANCIAL STATEMENTS

Change in Group Profit currency rate after tax 2011 % RM’000

Rp/USD -3.0 +187 Rp/USD +3.0 -187 USD/RMB -3.0 -2,720 USD/RMB +3.0 +2,720

Interest rate risk management

The Group’s exposure to interest rate risk arises primarily from their loans and borrowings. The interest rate management policy is aimed at optimising net interest cost and reducing volatility.

Sensitivity analysis for interest rate risk

The table below demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant, of the Group’s profit net of tax through the impact on interest expense on floating rate loans and borrowings.

Change in Group Profit interest rate after tax b.p.s. RM’000

2012 Cost of Fund -25 +1,183 Cost of Fund +25 -1,183 2011 Cost of Fund -25 +1,323 Cost of Fund +25 -1,323

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligation resulting in financial loss to the Group.

The Group is exposed to credit risk mainly from its customer base, including trade receivables. The Group extends credit to its customers based upon careful evaluation of the customer’s financial condition and credit history. Trade receivables are monitored on an ongoing basis by the Group’s credit control department.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is the carrying amount of financial assets which are mainly trade and other receivables, deposits with license bank and cash and bank balances.

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Liquidity risk management

Liquidity risk is the risk that an entity will encounter difficulty in meeting its financial obligations due to a shortage of funds.

The Group and the Company practises prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital.

Analysis of financial instruments by remaining contractual maturities GOVERNANCE ACTIVITIES

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations:

Within One to Over five 2012 one year five years years Total RM’000 RM’000 RM’000 RM’000

Group Non-interest bearing Trade and other payables 809,886 - - 809,886 Long term and deferred payables 22,384 58,862 - 81,246 Financial guarantee* (Note 36) ---- Interest bearing Redeemable convertible secured bonds 10,563 42,308 330,180 383,051 FINANCIALS Loans and borrowings 66,689 630,520 - 697,209 Long term and deferred payables 4,512 1,076 - 5,588 Total undiscounted financial liabilities 914,034 732,766 330,180 1,976,980

Company

Non-interest bearing INFORMATION ADDITIONAL Trade and other payables 261,261 - - 261,261 Financial guarantee* (Note 36) ---- Interest bearing Redeemable convertible secured bonds 10,563 42,308 330,180 383,051 Total undiscounted financial liabilities 271,824 42,308 330,180 644,312 NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 168

NOTES TO THE FINANCIAL STATEMENTS

Within One to Over five 2011 one year five years years Total RM’000 RM’000 RM’000 RM’000

Group Non-interest bearing Trade and other payables 425,414 - - 425,414 Financial guarantee* (Note 36) ---- Interest bearing Redeemable convertible secured bonds 10,534 42,337 340,713 393,584 Loans and borrowings 77,091 734,723 50,800 862,614 Long term and deferred payables 5,852 7,015 - 12,867 Total undiscounted financial liabilities 518,891 784,075 391,513 1,694,479

Company Non-interest bearing Trade and other payables 326,801 - - 326,801 Financial guarantee* (Note 36) ---- Interest bearing Redeemable convertible secured bonds 10,534 42,337 340,713 393,584 Loans and borrowings 8,315 - - 8,315 Total undiscounted financial liabilities 345,650 42,337 340,713 728,700

* At the end of the reporting period, it was not probable that the counterparties to financial guarantee contracts will claim under the contract. Consequently, the amount included is RMNil.

Fair Value

The carrying amounts of current financial assets and liabilities are reasonable approximation of fair values, either due to their short term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. The fair value of long-term financial assets and liabilities are determined by the present value of future cash flow estimated and discounted using the current interest rates for similar instruments at the end of the reporting date. There is no material difference between the fair values and carrying values of these assets and liabilities as of the reporting date. The Group’s long-term loans other than the redeemable convertible secured bonds bear interest at floating rate and hence their carrying amount approximates fair value. The liability component of the redeemable convertible secured bonds is recognised initially at fair value and subsequently at amortised cost using effective interest method.

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

The fair value, together with the carrying amount of the redeemable convertible secured bonds and long-term deferred payables shown in the statement of financial position is as follow:

The Group and The Company 2012 2011

Carrying Fair Carrying Fair GOVERNANCE ACTIVITIES amount value amount value RM’000 RM’000 RM’000 RM’000

Financial liabilities Redeemable convertible secured bonds 275,785 276,444 268,298 271,327

The Group 2012 2011 Carrying Fair Carrying Fair amount value amount value RM’000 RM’000 RM’000 RM’000

Financial liabilities Long-term deferred payables 78,184 78,230 12,867 13,225 FINANCIALS Financial instruments measured at fair value, in general, can be grouped into Levels 1 to 3 based on the degree to which the fair value is observable; quoted prices in active markets (Level 1), valuation inputs based on observable market data, either directly or indirectly (Level 2) or based on unobservable market data (Level 3).

The fair value disclosure of the redeemable convertible secured bonds and long-term deferred payables shown above accordingly would falls under Level 2 of the fair value hierarchy.

39. SEGMENT REPORTING INFORMATION ADDITIONAL

Segment information is presented in respect of the Group’s business segments, which reflect the Group’s internal reporting structure that are regularly reviewed by the Group’s chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance.

For management purposes, the Group is organised into the following operating divisions:

(i) Properties - investment and development of residential, commercial and industrial properties (ii) Plastics - manufacture, assembly and sale of a range of plastic moulded products (iii) Investment holding - investment holding operations and provision of management and property support services NOTICES and Others

Inter-segment revenue comprises dividend income, interest charges and management fees. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 170

NOTES TO THE FINANCIAL STATEMENTS

Information regarding the Group’s reportable segments is presented below:

(a) Business Segments

Investment Holding & 2012 Properties Plastics Others Elimination Group RM’000 RM’000 RM’000 RM’000 RM’000

Revenue External revenue 1,554,494 208,822 11,944 - 1,775,260 Inter-segment revenue - - 149,185 (149,185) - Total revenue 1,554,494 208,822 161,129 (149,185) 1,775,260

Results Operating profit 296,657 16,192 143,344 (148,465) 307,728 Interest income 9,997 Finance costs (2,202) Income tax (83,755) Profit for the financial year 231,768

Other information Additions to non-current assets 384,231 30,568 447 - 415,246 Depreciation and amortisation 4,032 9,743 157 - 13,932

Assets and Liabilities Segment assets 3,112,870 166,660 244,595 - 3,524,125 Current and deferred tax assets 70,961 Total assets 3,595,086 Segment liabilities 1,924,898 70,871 283,317 - 2,279,086 Current and deferred tax liabilities 60,999 Total liabilities 2,340,085

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

Investment Holding & 2011 Properties Plastics Others Elimination Group RM’000 RM’000 RM’000 RM’000 RM’000

Revenue

External revenue 1,363,711 202,610 4,375 - 1,570,696 GOVERNANCE ACTIVITIES Inter-segment revenue - - 133,941 (133,941) - Total revenue 1,363,711 202,610 138,316 (133,941) 1,570,696

Results Operating profit 240,283 16,331 107,177 (132,290) 231,501 Interest income 10,166 Finance costs (3,039) Income tax (69,991) Profit for the financial year 168,637

Other information Additions to non-current assets 18,020 25,729 128 - 43,877 FINANCIALS Depreciation and amortisation 2,391 9,297 104 - 11,792

Assets and Liabilities Segment assets 2,192,311 144,407 480,677 - 2,817,395 Current and deferred tax assets 32,986 Total assets 2,850,381 INFORMATION

Segment liabilities 1,369,450 59,048 294,062 - 1,722,560 ADDITIONAL Current and deferred tax liabilities 39,332 Total liabilities 1,761,892

Segment assets consist of property, plant and equipment, prepaid lease payment, investment properties, land held for property development, intangible assets, inventories, property development cost, other current assets that are used in the operating activities of the segment and excluding current and deferred tax assets. Segment liabilities include borrowings, trade payables, other payables and accrued liabilities and exclude items such as tax payable and deferred tax liabilities.

Additions to non-current assets comprises additions to property, plant and equipment, investment properties and land held NOTICES for property development. FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 172

NOTES TO THE FINANCIAL STATEMENTS

(b) Geographical Information

With the exception of a manufacturing set up for plastics moulded products in Indonesia, the entire Group’s active business operations are located in Malaysia.

The following is an analysis of the Group’s external sales by location of customers, irrespective of the origin of the goods/services:

Revenue by geographical market

The Group 2012 2011 RM’000 RM’000

Malaysia 1,589,840 1,434,203 Indonesia 98,542 86,008 Other countries 86,878 50,485 1,775,260 1,570,696

The following is an analysis of the carrying amount of segment assets and capital expenditure by geographical areas in which the assets are located:

Carrying amount of Carrying amount of segment assets capital expenditure 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Malaysia 3,455,875 2,658,237 403,638 19,293 Indonesia 68,150 62,727 11,608 11,580 China 100 96,431 - - 3,524,125 2,817,395 415,246 30,873

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

40. OPERATING LEASE COMMITMENTS

As Lessee – for the lease of commercial buildings

The future operating lease commitments for rental of commercial buildings (net of lease rentals receivable from sublease) contracted for as at reporting date but not recognised as liabilities are as follows:

Lease rentals Lease rentals GOVERNANCE ACTIVITIES payable receivable Net The Group 2012 2011 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Less than one year 10,000 41,909 (4,972) (14,404) 5,028 27,505 One to two years - 10,624 - (3,676) - 6,948 10,000 52,533 (4,972) (18,080) 5,028 34,453

Provision for future operating lease (Note 32) (4,889) (11,800) 139 22,653

The operating lease commitments are in respect of leaseback of commercial buildings sold en-bloc ie The Icon, Jalan Tun Razak and the Corporate Building Block of Southgate Commercial Centre from the purchasers at 7% and 8% per annum of the respective buildings’ sale considerations. The lease is for a period of 3 and 2 years from the commencement date as set FINANCIALS out in the respective leaseback agreements. Leaseback for The Icon, Jalan Tun Razak had fully expired during the year with its West Wing and East Wing expired on October 2012 and December 2012 respectively. Leaseback for the Corporate Building Block of Southgate Commercial Centre has commenced since September 2011 and shall expire by August 2013.

During the financial year, the Group has recognised in the income statement leaseback rental amounting to RM30.6 million (2011: RM33.6 million) and rental income from sublease amounting to RM21.3 million (2011: RM8.1 million). The Group has also made further provision of RM1.6 million (2011: RM11.8 million) for future lease commitments based on assessment of expected net outflows. INFORMATION ADDITIONAL As Lessor – for the lease of investment properties

The Group leases out its investment properties. The future minimum lease receivable under non-cancellable leases are as follows:

Lease rentals receivables 2012 2011 The Group RM’000 RM’000 NOTICES Less than one year 339 482 One to two years 106 398 More than two years - 128 445 1,008 FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 174

NOTES TO THE FINANCIAL STATEMENTS

41. CAPITAL COMMITMENTS

The Group 2012 2011 RM’000 RM’000

Approved and contracted for: - Acquisition of property, plant and equipment 10,245 9,915 - Joint Venture Agreement for a proposed joint development of land along Jalan Tun Razak, Kuala Lumpur - 100,204 - Shares Sale Agreement to acquire entire equity interest in entity with development land in Rawang - 86,300 10,245 196,419

42. RELATED PARTY DISCLOSURES

(a) Significant related party disclosures during the financial year are as follows:

The Group 2012 2011 RM’000 RM’000

Transactions with directors of the Company and subsidiary companies (i) Rental expenses paid to Principal View Sdn Bhd 1,313 1,166 (ii) Maintenance charges paid to Harian Madu Sdn Bhd 104 104 (iii) Sales of development properties to Directors of the Company and/or family member(s) and/or to a Company in which the family members of a Director has interest 1,512 3,097 (iv) Sales of development properties to Directors of subsidiary companies and/or family member(s) 3,786 529

Related party and relationship

Name of related party Relationship (i) Principal View Sdn Bhd - Company in which Tan Sri Dato’ Sri Leong Hoy Kum has substantial financial interest (ii) Harian Madu Sdn Bhd - Company in which the directors and shareholders are brothers-in-law to Tan Sri Dato’ Sri Leong Hoy Kum

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

(b) Key management personnel compensation

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Directors of the Company GOVERNANCE ACTIVITIES Directors’ fees 150 150 150 150 Other emoluments 15,377 10,193 1,562 10,193 Benefits-in-kind 124 129 58 129 Total short-term employment benefits 15,651 10,472 1,770 10,472 Post employment benefits - EPF 1,209 1,223 187 1,223 Options under ESOS 897 1,698 301 1,698 17,757 13,393 2,258 13,393 Other key management personnel (including Directors of the subsidiary companies) Remuneration 6,225 5,379 271 1,056 Benefits-in-kind 197 209 10 38 Total short-term employment benefits 6,422 5,588 281 1,094 FINANCIALS Post employment benefits - EPF 699 633 32 125 Options under ESOS 1,197 2,140 56 315 8,318 8,361 369 1,534 Total compensation 26,075 21,754 2,627 14,927 INFORMATION Movements in share options granted under the ESOS to key management personnel during the financial year are as follows: ADDITIONAL

2012 2011 Unit’000 Unit’000

Directors of the Company At 1 January 10,800 10,800 Granted - -

Exercised (1,500) - NOTICES At 31 December 9,300 10,800 FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 176

NOTES TO THE FINANCIAL STATEMENTS

2012 2011 Unit’000 Unit’000

Other key management personnel (including Directors of the subsidiary companies) At 1 January 13,605 13,605 Granted 490 - Exercised (1,311) - At 31 December 12,784 13,605

43. SUBSEQUENT EVENTS

Through an announcement made to Bursa Malaysia on 10 December 2012 and subsequent announcements thereon, the Company is undertaking the following proposals (“Proposals”):

(a) Renounceable rights issue of up to 280,099,803 new ordinary shares of RM0.50 each in the Company (“Rights Shares”) together with up to 168,059,881 free detachable warrants (“Warrants”) on the basis of 1 Rights Share for every 3 existing ordinary shares of RM0.50 sen each (“Mah Sing Shares”) held and 3 Warrants for every 5 Rights Shares subscribed for by the entitled shareholders at an issue price of RM1.42 per Right Share (“Rights Issue With Warrants”);

(b) Bonus issue of new Mah Sing Shares (“Bonus Shares”) to be credited as fully paid-up on the basis of 1 Bonus Share for every 5 Mah Sing Shares held after the Rights Issue with Warrants (“Bonus Issue”); and

(c) Exemption for Mayang Teratai Sdn Bhd (“Mayang Teratai”) and persons acting in concert with it from the obligation to carry out a mandatory offer on the remaining voting shares in the Company not held by Mayang Teratai and persons acting in concert with it after the Rights Issue with Warrants (“Exemption”).

On 7 February 2013, all approvals for the Proposals have been obtained.

On 7 February 2013, the Company announced that the Rights Shares and Warrants will be listed on 22 March 2013 and accordingly, the Rights Issue with Warrants will be completed on the same day.

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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NOTES TO THE FINANCIAL STATEMENTS MESSAGES

44. SUPPLEMENTARY INFORMATION - DISCLOSURE ON REALISED AND UNREALISED PROFITS

The determination of realised and unrealised profits or losses is based on Guidance of Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants on December 20, 2010. A charge or credit to the profit or loss of a legal entity is deemed realised when it is resulted from the consumption of resource of all types and form, regardless of whether it is consumed in the ordinary course of business or otherwise. A resource may be consumed through sale or use.

Where a credit or a charge to the profit or loss upon initial recognition or subsequent measurement of an asset or a liability GOVERNANCE ACTIVITIES is not attributed to consumption of resource, such credit or charge should not be deemed as realised until the consumption of resource could be demonstrated.

The breakdown of the retained earnings of the Group and of the Company into realised and unrealised profits or losses, pursuant to the directive, are as follows:

The Group The Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Total retained earnings of the Group and the Company - Realised 616,308 498,520 138,132 97,214 - Unrealised 60,464 15,952 (186) 3,005 676,772 514,472 137,946 100,219 Total share of accumulated losses from associated company FINANCIALS - Realised (73) (73) - - 676,699 514,399 137,946 100,219 Less: Consolidation adjustments (22,912) (17,633) - - Total retained earnings as per statement of financial position 653,787 496,766 137,946 100,219

This supplementary information has been made solely for complying with the disclosure requirements as stipulated in the INFORMATION

directive of Bursa Malaysia Securities Berhad and is not made for any other purposes. ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 178

STATEMENT BY DIRECTORS

We, Jen. Tan Sri Yaacob Bin Mat Zain (R) and Tan Sri Dato’ Sri Leong Hoy Kum, being two of the Directors of Mah Sing Group Berhad, state that, in the opinion of the Directors, the accompanying financial statements set out on pages 92 to 176 are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012 and of the financial performance and the cash flows of the Group and of the Company for the financial year ended on that date in accordance with Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia.

The supplementary information set out on page 177, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

Signed on behalf of the Board In accordance with a resolution of the Board of Directors dated 27 February 2013.

JEN. TAN SRI YAACOB BIN MAT ZAIN (R) TAN SRI DATO’ SRI LEONG HOY KUM Director Director

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DECLARATION BY THE DIRECTOR PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE COMPANY MESSAGES

I, Dato’ Ng Poh Seng, being the Director primarily responsible for the financial management of Mah Sing Group Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements set out on pages 92 to 176 are correct.

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. CIIISGOVERNANCE ACTIVITIES

DATO’ NG POH SENG

Subscribed and solemnly declared at Kuala Lumpur this 27 February 2013.

Before me: FINANCIALS SHAFIE B. DAUD NO. W350 COMMISSIONER FOR OATHS INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 180

PROPERTIES OWNED BY THE GROUP AS AT 31.12.2012

Location Description Date of Acquisition / Tenure Land Area Net Book Date of Valuation (Acre) Value (RM)

Lot 9, Lingkaran Sultan Mohamed 1 Industrial Building 8-Aug-1992 Leasehold 7.00 4,525,641 Kawasan Perindustrian (Age: 21 years) (expiring on Bandar Sultan Suleiman 2-Mar-2019) 42000 Port Klang Selangor Darul Ehsan

Wisma Mah Sing 31 units office lots 1995 and 2012 Freehold - 5,207,457 163 Jalan Sungai Besi and parking lots 57100 Kuala Lumpur (Age: 16 years)

Kawasan Industri Jababeka Industrial Building 25-Jun-1997 Leasehold 5.20 6,112,548 J1 Jababeka XIIB, Blok W17-20 (Age: 15 years) (expiring on Cikarang Industrial Estate 29-Jun-2022) Bekasi, Indonesia

Mah Sing Integrated Industrial Park Residential 18-Oct-1999 Leasehold 3.18 3,754,369 Mukim Sungai Buloh Development (expiring on Daerah Petaling 11-Dec-2096) Negeri Selangor

Sri Pulai Perdana Mixed 23-Feb-2000 Freehold 53.03 913,908 Mukim Pulai Development Daerah Johor Bahru Land Johor Darul Takzim

Austin Perdana Mixed 30-Jun-2003 Freehold 27.83 26,551,207 Mukim Tebrau Development Daerah Johor Bahru Land Johor Darul Takzim

Aman Perdana Mixed 2-Apr-2004 Freehold 54.04 37,223,744 Mukim Kapar Development Daerah Klang Land Selangor Darul Ehsan

Sierra Perdana Mixed 21-Dec-2005 Freehold 116.93 60,541,272 Mukim Plentong Development Daerah Johor Bahru Land Johor Darul Takzim

One Legenda Residential 20-Mar-2006 Freehold - 28,602,300 Mukim Pekan Cheras Development Daerah Hulu Langat Land Selangor Darul Ehsan

Hijauan Residence and Residential 30-Oct-2006 Freehold 29.16 35,515,497 Bayu Sekamat, Cheras Development and Lot 3442, Lot 670 & Land 29-Sep-2008 Lot 671 Mukim Cheras Daerah Hulu Langat Selangor Darul Ehsan

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PROPERTIES OWNED BY THE GROUP AS AT 31.12.2012 MESSAGES

Location Description Date of Acquisition / Tenure Land Area Net Book Date of Valuation (Acre) Value (RM)

Southbay Penang Mixed 13-Jun-2007 Freehold 38.83 203,609,688 Mukim 12, Daerah Barat Daya Development Negeri Pulau Pinang Land

Southgate Commercial Centre Commercial 27-Jul-2007 Freehold - FINANCIALS 913,232 GOVERNANCE ACTIVITIES Seksyen 92 Development Bandar Kuala Lumpur Land

Sri Pulai Perdana 2 (SPP2) Mixed 13-Jun-2008 Freehold 18.91 32,204,983 Mukim Senai, Tempat Kangkar Pulai Development Daerah Kulaijaya Land Johor Darul Takzim

Icon Residence, Mont Kiara Residential 28-Feb-2007 Freehold - 82,662,215 Lot 55331, Mukim Batu Development Daerah Kuala Lumpur Land Wilayah Persekutuan

Garden Residence, Cyberjaya Residential 12-Aug-2009 Freehold 12.82 79,335,905 Mukim Dengkil, Daerah Sepang Development Selangor Darul Ehsan Land i-Parc, Bukit Jelutong Industrial 16-Sep-2009 Freehold - 1,975,834 Lot 64237 & Lot 64238 Development Mukim Damansara, District of Petaling Selangor Darul Ehsan

Perdana Residence 2, Selayang Residential 28-Oct-2009 Freehold 3.73 7,848,900 Mukim Batu, Bandar Selayang Development Daerah Gombak Land Selangor Darul Ehsan INFORMATION ADDITIONAL Petaling Jaya Commercial Hub Residential & 28-Oct-2009 Leasehold 12.42 205,396,932 Lot No.P.T.245 Mixed (expiring on Mukim Damansara Development 29-Sep-2111) Daerah Petaling Land Selangor Darul Ehsan

Icon Residence Residential 2-Dec-2009 Freehold 3.38 48,589,910 Georgetown, Penang Development Lot No.951, Seksyen 13 Land

Bandar Georgetown NOTICES Daerah Timur Laut Pulau Pinang

Ferringhi Residence, Penang Residential 23-Nov-2010 Freehold 56.89 181,740,038 Mukim 17 Development Daerah Timur Laut Land Batu Ferringhi Pulau Pinang FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 182

PROPERTIES OWNED BY THE GROUP AS AT 31.12.2012

Location Description Date of Acquisition / Tenure Land Area Net Book Date of Valuation (Acre) Value (RM) i-Parc2, Shah Alam Industrial 8-Feb-2010 Freehold - 3,572,536 GRN 122900 No Lot 61788 Development Pekan Hicom Daerah Petaling Selangor Darul Ehsan

Garden Plaza, Cyberjaya Commercial Land 22-Feb-2010 Freehold - 48,892,605 Mukim Dengkil Daerah Sepang Selangor Darul Ehsan

M-Suites Commercial 22-Apr-2010 Freehold - 32,806,846 GRN 71445 Lot 293, Seksyen 89 Development Daerah Kuala Lumpur Negeri Wilayah Persekutuan

Kinrara Residence Residential 9-Jul-2010 Leasehold 31.35 113,374,675 Mukim of Petaling Development (expiring on Daerah Petaling 31-Aug-2108 and Selangor Darul Ehsan 12-Apr-2111)

Clover, Cyberjaya Residential 3-Oct-2010 Freehold - 65,668,054 Mukim Dengkil Development Daerah Sepang Land Selangor Darul Ehsan

M-City Mixed 3-Nov-2010 Freehold - 203,038,800 Mukim Ampang Development Daerah Kuala Lumpur Land Negeri Wilayah Persekutuan i-Parc3, Bukit Jelutong Industrial 9-Jul-2010 Freehold - 14,905,217 Geran 20999, Lot 1115 Development Mukim of Damansara District of Petaling Selangor Darul Ehsan

Star Avenue @ D’sara Commercial 9-Jul-2010 Leasehold - 61,750,295 Pekan Baru Subang Development (expiring on Daerah Petaling Jan/Sep 2102) Negeri Selangor

Kinrara Residence - 2B Residential 5-Jul-2010 Leasehold - 5,576,931 Mukim of Petaling Development (expiring on Daerah Petaling 7-Sep-2108) Selangor Darul Ehsan

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PROPERTIES OWNED BY THE GROUP AS AT 31.12.2012 MESSAGES

Location Description Date of Acquisition / Tenure Land Area Net Book Date of Valuation (Acre) Value (RM)

StarParc Point Commercial 10-Nov-2008 Freehold (JV) - 2,176,855 GM2018, Lot 21717, Mukim Setapak Development (JV date) Tempat Kampong Pasir Werdieburn Jalan Genting Klang, Daerah KL

State of Wilayah Persekutuan KL FINANCIALS GOVERNANCE ACTIVITIES

Mah Sing i-Parc Industrial 12-Apr-2011 Freehold 182.30 70,854,753 Mukim Tanjung Kupang Development Daerah Johor Bahru Johor Darul Ta’zim

M Residence @ Rawang Residential 5-Oct-2011 Freehold 190.76 154,191,684 Lot 1266,1316 & 1952 Development PT36307 & PT36308 Mukim of Rawang Daerah Gombak Selangor Darul Ehsan

Marvellous Vantage Commercial (5 units) 15-Apr-2011 Freehold 0.35 5,309,600 5 units at Southgate commercial centre (Age: 2 years) Seksyen 92 Bandar Kuala Lumpur

Kawasan Industrik Mitrakarawang Industrial Building 1-Nov-2011 Leasehold 6.00 10,015,286 Jalan Mitra Timur II Plot D-18-20 & 37-39 (Age: 1 year) (expiring on Karawang 41361 12-Dec-2037) Indonesia

M Residence 2 @ Rawang Residential 29-Feb-2012 Leasehold 156.65 51,353,578 Bandar Kundang Development (expiring on Daerah Gombak 15-Feb-2104) INFORMATION

Negeri Selangor Darul Ehsan ADDITIONAL

Sutera Avenue Commercial 26-Mar-2012 Leasehold 2.07 38,689,111 Lot 37, Harbour City Development (expiring on Kota Kinabalu 31-Dec-2096) Negeri Sabah

Southville City Mix 21-May-2012 Freehold 420.21 369,093,981 Mukim Dengkil Development Daerah Sepang Land

Negeri Selangor NOTICES

Meridin @ Medini Iconic 18-Oct-2012 Leasehold 8.19 66,878,486 Medini, Iskandar Malaysia Integrated (expiring on Mukim Pulai, Daerah Johor Bahru Development 30-Sep-2111) Negeri Johor FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 184

STATISTICS OF SHAREHOLDINGS AS AT 6 MAY 2013

Authorised Share Capital : RM1,000,000,000 Issued and Fully Paid Share Capital : RM560,822,321 Class of Shares : Ordianry shares of RM0.50 each Voting Rights : One vote per ordianry share on a poll

ANALYSIS OF SHAREHOLDINGS

Size of Holdings No. of Holders No. of Shares % 1 - 99 337 9,491 0.001 100 - 1,000 704 447,509 0.040 1,001 - 10,000 3,938 16,697,494 1.488 10,001 - 100,000 1,441 38,673,720 3.448 100,001 - 56,082,231* 212 324,599,881 28.940 56,082,232 and above ** 8 741,216,547 66.083 Total 6,640 1,121,644,642 100.000

Remark: * Less than 5% of issued shares ** 5% and above of issued shares

Substantial Shareholders

No. of Ordinary Shares Held Name Direct % Indirect % Mayang Teratai Sdn Bhd 395,997,200 35.305 - - Employees Provident Fund Board 105,399,360 9.397 - - Koperasi Permodalan FELDA Malaysia Berhad 78,849,633 7.030 - - Kumpulan Wang Persaraan (Diperbadankan) 67,522,066 6.02 Tan Sri Dato’ Sri Leong Hoy Kum - - a 395,997,200 35.305

Notes: a Deemed interested by virtue of shareholdings of Mayang Teratai Sdn Bhd

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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STATISTICS OF SHAREHOLDINGS AS AT 6 MAY 2013 MESSAGES

Directors’ Shareholdings

No. of Ordinary Shares Held Name Direct % Indirect % Jen. Tan Sri Yaacob Bin Mat Zain (R) - - * 33,797 0.003 Tan Sri Dato’ Sri Leong Hoy Kum - - # 397,316,810 35.423 CIIISGVRAC FINANCIALS GOVERNANCE ACTIVITIES Dato’ Ng Poh Seng 26,800 0.002 - Lim Kiu Hock 738,000 0.066 - Leong Yuet Mei - - * 209,301 0.019

Notes: * Deemed interested by virtue of shareholdings of family member(s) # Deemed interested by virtue of shareholdings of Mayang Teratai Sdn Bhd and his family member(s)

LIST OF TOP THIRTY HOLDERS

NO. NAME No. of Shares % 1 HSBC Nominees (Asing) Sdn Bhd 140,079,288 12.489 Exempt AN For Credit Suisse (SG BR-TST-Asing) 2 ABB Nominee (Tempatan) Sdn Bhd 110,257,500 9.830 Pledged Securities Account For Mayang Teratai Sdn Bhd 3 Citigroup Nominees (Tempatan) Sdn Bhd 104,855,860 9.348 Employees Provident Fund Board 4 CIMB Group Nominees (Tempatan) Sdn Bhd 91,030,500 8.116 Pledged Securities Account For Mayang Teratai Sdn Bhd (49643 JPLE) 5 RHB Capital Nominees (Tempatan) Sdn Bhd 82,000,000 7.311 Pledged Securities Account For Mayang Teratai Sdn Bhd 6 Koperasi Permodalan FELDA Malaysia Berhad 71,916,301 6.412 INFORMATION

7 Mayang Teratai Sdn Bhd 69,231,200 6.172 ADDITIONAL 8 Kumpulan Wang Persaraan (Diperbadankan) 64,912,566 5.787 9 EB Nominees (Tempatan) Sendirian Berhad 43,478,000 3.876 Pledged Securities Account For Mayang Teratai Sdn Bhd (CSC) 10 HSBC Nominees (Asing) Sdn Bhd 36,299,466 3.236 TNTC For Saudi Arabian Monetary Agency 11 HSBC Nominees (Asing) Sdn Bhd 21,979,200 1.960 HSBC-FS for Value Partners High - Dividend Stocks Fund

12 HSBC Nominees (Asing) Sdn Bhd 18,901,900 1.685 NOTICES Exempt AN For JPMorgan Chase Bank, National Association (U.K.) 13 Citigroup Nominees (Asing) Sdn Bhd 12,000,800 1.070 CBHK for Kuwait Investment Authority (Fund 208) 14 Valuecap Sdn Bhd 11,119,600 0.991 15 Cartaban Nominees (Tempatan) Sdn Bhd 8,173,866 0.729 Exempt AN for Eastspring Invesments Berhad FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 186

STATISTICS OF SHAREHOLDINGS AS AT 6 MAY 2013

LIST OF TOP THIRTY HOLDERS (cont’d)

NO. NAME No. of Shares % 16 AmanahRaya Trustees Berhad 7,286,700 0.650 Public Islamic Select Treasures Fund 17 Koperasi Permodalan FELDA Malaysia Berhad 6,666,666 0.594 18 HLB Nominees (Asing) Sdn Bhd 6,566,100 0.585 Pledged Securities Account For Silverspring Finance Limited (SIN 91235-7) 19 HSBC Nominees (Asing) Sdn Bhd 6,236,560 0.556 Coutts & Co Ltd HK For Neranti Investments Limited 20 Citigroup Nominees (Asing) Sdn Bhd 5,907,745 0.527 CB LDN For Aegon Custody B.V. 21 HSBC Nominees (Asing) Sdn Bhd 5,849,914 0.522 BNY Brussels For Wisdomtree Emerging Markets Smallcap Dividend Fund 22 AmanahRaya Trustees Berhad 5,715,946 0.510 Amanah Saham Wawasan 2020 23 Cartaban Nominees (Asing) Sdn Bhd 4,793,233 0.427 RBC Investor Services Bank For Macquarie Asia New Stars Fund (Macquarie FD S) 24 Cartaban Nominees (Asing) Sdn Bhd 3,966,666 0.354 State Street Luxembourg Fund OD85 For ABN AMRO Multi - Manager Funds 25 Citigroup Nominees (Asing) Sdn Bhd 3,859,633 0.344 CBNY For Dimensional Emerging Markets Value Fund 26 HSBC Nominees (Asing) Sdn Bhd 3,659,200 0.326 Exempt AN For JPMorgan Chase Bank, National Association (U.S.A) 27 Citigroup Nominees (Asing) Sdn Bhd 3,618,600 0.323 SMBC Nikko BK (LUX) SA For Nikko BNY Mellon Emerging Marketsmid-Small Cap Equity Fund 28 Citigroup Nominees (Asing) Sdn Bhd 3,477,986 0.310 CBNY For DFA Emerging Markets Small CAP Series 29 HSBC Nominees (Asing) Sdn Bhd 3,421,366 0.305 Exempt AN For JPMorgan Chase Bank, National Association (Taiwan) 30 HSBC Nominees (Asing) Sdn Bhd 3,253,933 0.290 Exempt AN For JPMorgan Chase Bank, National Association (NORGES BK LEND) Total : 960,516,295 85.635

MAH SING GROUP BERHAD ANNUAL REPORT 2012 CORE FACTS

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STATISTICS OF WARRANT HOLDINGS AS AT 6 MAY 2013 MESSAGES

No. of Outstanding Warrants-B : 168,059,241 Exercise Price : RM2.38 Exercise Period : 19 March 2013 to 18 March 2018 Exercise Rights : Each warrant entitles the holder to subcribe for one new ordinary share of RM0.50 each Voting Rights at Meetings : One vote per warrant on a poll of Warrant Holders CIIISGVRAC FINANCIALS GOVERNANCE ACTIVITIES

ANALYSIS OF WARRANT HOLDINGS

Size of Holdings No. of Holders No. of Warrants % 1 - 99 183 9,344 0.006 100 - 1,000 1,578 784,172 0.467 1,001 - 10,000 1,585 4,803,970 2.858 10,001 - 100,000 290 8,349,135 4.968 100,001 - 8,402,961* 69 48,248,318 28.709 8,402,962 and above ** 6 105,864,302 62.992 Total 3,711 168,059,241 100.000

Remark: * Less than 5% of issued warrants ** 5% and above of issued warrants

Directors’ Warrant Holdings

No. of Warrants Held

Name Direct % Indirect % INFORMATION ADDITIONAL Jen. Tan Sri Yaacob Bin Mat Zain (R) - - * 5,069 0.003 Tan Sri Dato’ Sri Leong Hoy Kum - - # 60,126,254 35.777 Dato’ Ng Poh Seng 4,080 0.002 - - Lim Kiu Hock 112,800 0.067 - - Leong Yuet Mei - - * 31,395 0.019

Notes: * Deemed interested by virtue of warrant holdings of family member(s) NOTICES # Deemed interested by virtue of warrant holdings of Mayang Teratai Sdn Bhd and his family member(s) FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 188

STATISTICS OF WARRANT HOLDINGS AS AT 6 MAY 2013

LIST OF TOP THIRTY HOLDERS

NO. NAME No. of Shares % 1 CIMB Group Nominees (Tempatan) Sdn Bhd 24,618,300 14.649 Pledged Securities Account For Mayang Teratai Sdn Bhd (49643 JPLE) 2 Mayang Teratai Sdn Bhd 22,508,714 13.393 3 HSBC Nominees (Asing) Sdn Bhd Exempt AN For Credit Suisse (SG BR-TST-Asing) 21,367,602 12.714 4 Citigroup Nominees (Tempatan) Sdn Bhd 15,747,924 9.371 Employees Provident Fund Board 5 Koperasi Permodalan FELDA Malaysia Berhad 10,787,445 6.419 6 Kumpulan Wang Persaraan (Diperbadankan) 9,794,319 5.828 7 EB Nominees (Tempatan) Sendirian Berhad 6,646,800 3.955 Pledged Securities Account For Mayang Teratai Sdn Bhd (CSC) 8 ABB Nominee (Tempatan) Sdn Bhd 6,154,500 3.662 Pledged Securities Account For Mayang Teratai Sdn Bhd 9 Voon Chong Kian 5,000,000 2.975 10 HSBC Nominees (Asing) Sdn Bhd 2,759,763 1.642 Exempt AN For JPMorgan Chase Bank, National Association (U.K.) 11 HSBC Nominees (Asing) Sdn Bhd 2,037,420 1.212 HSBC-FS Value Partners High - Dividend Stocks Fund 12 CIMSEC Nominees (Asing) Sdn Bhd 1,832,438 1.090 Exempt AN For CIMB Securities (Singapore) Pte Ltd (Retail Clients) 13 Citigroup Nominees (Asing) Sdn Bhd 1,768,020 1.052 SMBC Nikko BK (LUX) SA For Nikko BNY Mellon Emerging Marketsmid-Small Cap Equity Fund 14 HLB Nominees (Asing) Sdn Bhd Pledged Securities Account For Silverspring Finance Limited (SIN 91235-7) 1,500,000 0.893 15 Cartaban Nominees (Tempatan) Sdn Bhd Exempt AN for Easterspring Invesments Berhad 1,226,079 0.730

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STATISTICS OF WARRANT HOLDINGS AS AT 6 MAY 2013 MESSAGES

LIST OF TOP THIRTY HOLDERS (cont’d)

NO. NAME No. of Shares % 16 Alliancegroup Nominees (Tempatan) Sdn Bhd 1,107,200 0.659 Pledged Securities Account For Ong Siew Eng @ Ong Chai (8040800) 17 Koperasi Permodalan FELDA Malaysia Berhad 999,999 0.595 CIIISGVRAC FINANCIALS GOVERNANCE ACTIVITIES 18 HSBC Nominees (Asing) Sdn Bhd 935,484 0.557 Coutts & Co Ltd HK For Neranti Investments Limited 19 Citigroup Nominees (Asing) Sdn Bhd 903,147 0.537 CB LDN For Aegon Custody B.V. 20 Public Nominees (Tempatan) Sdn Bhd 862,400 0.513 Pledged Securities Account For Yap Soon Heng (E-TJJ) 21 AmanahRaya Trustees Berhad 857,391 0.510 Amanah Saham Wawasan 2020 22 HSBC Nominees (Asing) Sdn Bhd 810,664 0.482 TNTC For Saudi Arabian Monetary Agency 23 CIMSEC Nominees (Tempatan) Sdn Bhd 800,020 0.476 CIMB Bank For Chen Yat Lee (MM1133) 24 HSBC Nominees (Asing) Sdn Bhd 708,179 0.421 Exempt AN For The Bank of New York Mellon (Mellon Acct) 25 UOB Kay Hian Nominees (Asing) Sdn Bhd 700,879 0.417 Exempt AN For UOB Kay Hian Pte Ltd (A/C Clients) 26 Citigroup Nominees (Asing) Sdn Bhd 573,919 0.342 CBNY For Dimensional Emerging Markets Value Fund 27 Citigroup Nominees (Asing) Sdn Bhd 471,927 0.281 CBNY For DFA Emerging Markets Small CAP Series 28 HSBC Nominees (Asing) Sdn Bhd 438,780 0.261 Exempt AN For JPMorgan Chase Bank, National Association (U.S.A) INFORMATION 29 Cartaban Nominees (Asing) Sdn Bhd 436,939 0.260 ADDITIONAL RBC Investor Services Bank For Macquarie Asia New Stars Fund (Macquarie FD S) 30 CIMSEC Nominees (Tempatan) Sdn Bhd 425,299 0.253 CIMB Bank For Teoh Ewe Jin (MY0829) Total 144,781,551 86.149 NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 190

NOTICE OF TWENTY-FIRST ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Twenty-First Annual General Meeting of Mah Sing Group Berhad (“Mah Sing” or “the Company”) will be held at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Tuesday, 25 June 2013 at 10.00 a.m., for the following purposes:-

AGENDA

As Ordinary Businesses:-

1. To receive the Audited Financial Statements for the financial year ended 31 December 2012 together with the Directors’ and Auditors’ Reports thereon. (Please refer to Note A)

2. To approve the declaration of a first and final dividend of 7.6 sen per ordinary share of RM0.50 each comprising 0.4 sen per share, less Malaysian Income Tax of 25% and single-tier dividend of 7.2 sen per share, in respect of the financial year ended 31 December 2012. (Resolution 1)

3. To approve the Directors’ fees for the financial year ended 31 December 2012. (Resolution 2)

4. To re-elect the following Directors who retire pursuant to Article 102 of the Company’s Articles of Association:-

(i) Tan Sri Dato’ Sri Leong Hoy Kum (Resolution 3) (ii) Captain Izaham Bin Abd. Rani (Please refer to Note B) (Resolution 4)

5. To re-appoint Messrs Deloitte KassimChan as Auditors of the Company for the financial year ending 31 December 2013 and to authorise the Directors to fix their remuneration. (Resolution 5)

As Special Businesses:-

6. To consider and if thought fit, to pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965:-

“THAT Jen. Tan Sri Yaacob Bin Mat Zain (R) who is over the age of seventy years and retiring in accordance with Section 129(2) of the Companies Act, 1965 be and is hereby re-appointed as a Director of the Company and to hold office until the conclusion of next Annual General Meeting of the Company.” (Resolution 6) (Please refer to Note B)

To consider and if thought fit, to pass the following resolutions, with or without any modification, as Ordinary Resolutions of the Company:-

7. AUTHORITY TO ISSUE SHARES

“THAT subject always to the Companies Act, 1965, and the approval of the regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the nominal value of the issued and paid-up share capital (excluding treasury shares) of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for listing of and quotation for the additional shares so issued AND FURTHER THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.” (Resolution 7)

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NOTICE OF TWENTY-FIRST ANNUAL GENERAL MEETING MESSAGES

8. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE AS SPECIFIED IN SECTION 2.3.1 (a) AND (b) OF THE CIRCULAR TO SHAREHOLDERS DATED 3 JUNE 2013 (“CIRCULAR”)

“THAT subject always to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and/or its subsidiaries (“Mah Sing Group”) to enter into and give effect to specified recurrent related party transactions of a revenue or trading nature of Mah

Sing Group with specified classes of Related Parties (as defined in the Main Market Listing Requirements FINANCIALS GOVERNANCE ACTIVITIES of Bursa Malaysia Securities Berhad) as specified in Section 2.3.1 (a) and (b) of the Circular, which are necessary for the day-to-day operations of Mah Sing Group provided that:-

(a) the transactions are in the ordinary course of business and are carried out at arms’ length basis on normal commercial terms of Mah Sing Group and on terms not more favourable to the Related Parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and

(b) disclosure is made in the Annual Report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate together with a breakdown of the aggregate value of the transactions during the financial year based on the type of transactions, names of the related parties and their relationship.

AND THAT such approval, shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting ("AGM") of the Company, at which time the mandate will lapse, unless the mandate is renewed by a resolution passed at that meeting; or

(b) the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ("Act") (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

whichever is earlier. INFORMATION

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to complete and ADDITIONAL do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.” (Resolution 8)

9. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE AS SPECIFIED IN SECTION 2.3.1 (c) OF THE CIRCULAR TO SHAREHOLDERS DATED 3 JUNE 2013 (“CIRCULAR”)

“THAT subject always to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad,

approval be and is hereby given to the Company and/or its subsidiaries (“Mah Sing Group”) to enter into NOTICES and give effect to specified recurrent related party transactions of a revenue or trading nature of Mah Sing Group with specified classes of Related Parties (as defined in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) as specified in Section 2.3.1 (c) of the Circular, which are necessary for the day-to-day operations of Mah Sing Group provided that:- FORM OF PROXY

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NOTICE OF TWENTY-FIRST ANNUAL GENERAL MEETING

AND THAT such approval, shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting ("AGM") of the Company, at which time the mandate will lapse, unless the mandate is renewed by a resolution passed at that meeting; or

whichever is earlier.

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.” (Resolution 9)

10. PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT subject to the Companies Act, 1965, provisions of the Company’s Memorandum and Articles of Association and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any applicable laws, regulations and guidelines issued by other regulatory authorities, and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to purchase and/or hold such amount of its ordinary shares on the market of Bursa Securities at any time upon such terms and conditions as the Directors in their absolute discretion deem fit and expedient in the interest of the Company (“Proposed Share Buy-Back”) provided that:-

(a) the aggregate number of shares which may be purchased and/or held by the Company shall not exceed ten percent (10%) of the total issued and paid-up ordinary share capital of the Company;

(b) the maximum amount of funds to be allocated by the Company for the purpose of purchasing its shares shall not exceed the retained profits and/or share premium account of the Company based on the latest audited financial statements and/or the latest management accounts (where applicable) available up to the transaction date of the Proposed Share Buy-Back;

(c) upon completion of the purchase(s) of the shares by the Company, the shares shall be dealt with in the following manner:

(i) to cancel the shares so purchased; or (ii) to retain the shares so purchased in treasury, either to be distributed as dividends to the shareholders of the Company and/or to be resold on the market of Bursa Securities; or (iii) to retain part of the shares so purchased as treasury shares and cancel the remainder; or (iv) any combination of the three.

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NOTICE OF TWENTY-FIRST ANNUAL GENERAL MEETING MESSAGES

AND THAT the authority conferred by this resolution will be effective upon the passing of this resolution and will continue to be in force until:-

(a) the conclusion of the next Annual General Meeting ("AGM") of the Company at which time it will lapse, unless the authority is renewed by a resolution passed at a general meeting, either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM after that date is required by law to be FINANCIALS GOVERNANCE ACTIVITIES held; or

whichever occurs first, but not as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date, and in any event, in accordance with the provisions of the guidelines issued by Bursa Securities or any other relevant authorities, relevant requirements and guidelines.

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to do all such acts, deeds and things as they may consider expedient or necessary in the best interest of the Company (including executing all such documents as may be required) to give full effect to the Proposed Share Buy-Back with full power to assent to any condition, variation, modification and/or amendment as may be required by any relevant authorities and to deal with all matters relating thereto and take all steps and do all acts and things in any manner as they may deem necessary in connection with the Proposed Share Buy-Back in the interest of the Company.” (Resolution 10)

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

BY ORDER OF THE BOARD

YANG BAO LING (MAICSA 7041240) KUAN HUI FANG (MIA 16876) Company Secretaries INFORMATION

Kuala Lumpur ADDITIONAL 3 June 2013 NOTICES FORM OF PROXY

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NOTICE OF TWENTY-FIRST ANNUAL GENERAL MEETING

Note A:

This Agenda item is meant for discussion only as under the provision of Section 169(1) of the Companies Act, 1965, the audited financial statements do not require a formal approval of the shareholders. Hence, this Agenda item will not be put forward for voting.

Note B:

The Board has conducted an annual assessment of the independence of all its Independent Directors, including Jen. Tan Sri Yaacob Bin Mat Zain (R) and Captain Izaham Bin Abd. Rani (R) who are seeking for re-appointment and re-election respectively at the forthcoming Twenty-First Annual General Meeting. The Board is satisfied that they have complied with the independence criteria adopted by the Board which is the same criteria used in the definition of “independent directors’ prescribed in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

NOTES: i. A member entitled to attend and vote at this meeting is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorised representative to attend and vote in his/her place. A proxy may but need not be a member of the Company and provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. ii. The power of attorney or a notarially certified copy thereof or the Form of Proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing. If the appointor is a corporation, it must be executed under its seal or under the hand of its officer or its attorney duly authorised on its behalf. iii. Where a member or the authorised nominee appoints more than one (1) proxy (subject always to a maximum of two (2) proxies of each meeting), or where an exempt authorised nominee appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. iv. The Form of Proxy together with the power of attorney (if any) under which it is signed or a duly notarially certified copy thereof must be deposited at the registered office of the Company at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur not less than forty-eight (48) hours before the time for holding this meeting or any adjournment thereof. v. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting) in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. vi. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. vii. Depositors whose name appear in the Record of Depositors as at 18 June 2013 shall be regarded as members of the Company entitled to attend the AGM or appoint proxies to attend and vote on his/her behalf.

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NOTICE OF TWENTY-FIRST ANNUAL GENERAL MEETING MESSAGES

EXPLANATORY NOTES ON SPECIAL BUSINESSES

1. Resolution 6

The re-appointment of Jen. Tan Sri Yaacob Bin Mat Zain (R), a person over the age of 70 years as Director of the Company to hold office until the conclusion of the next Annual General Meeting (“AGM”) of the Company shall take effect if the proposed 3 Resolution 6 has been passed by a majority of not less than three-fourths ( /4) of such members as being entitled to vote in

person or, where proxies are allowed, by proxy, at a general meeting of which not less than 21 days’ notice specifying FINANCIALS the GOVERNANCE ACTIVITIES intention to propose the resolution has been duly given.

2. Resolution 7

The proposed Resolution 7 will give powers to the Directors to issue up to a maximum ten per centum (10%) of the nominal value of the issued and paid-up share capital of the Company for the time being for such purposes as the Directors would consider in the best interest of the Company. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next AGM of the Company.

The general mandate sought for issue of securities is a renewal of the mandate that was approved by the shareholders at the Twentieth AGM held on 28 June 2012. As at the date of this notice, no new shares were issued pursuant to the general mandate which was approved by the shareholders at the Twentieth AGM.

The renewed mandate will enable the Directors to take swift action in case of a need for corporate exercises or in the event business opportunities arise which involve the issue/placing of shares and to avoid delay and cost in convening general meetings to approve such issue of shares.

3. Resolutions 8 and 9

The proposed Resolutions 8 and 9, if passed, will enable the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with related parties which are necessary for the Group’s day-to-day operations and are in the ordinary course of business carried out on an arm’s length basis on normal commercial terms and on terms not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company. The details of the proposals are set out in the Circular to Shareholders dated 3 June 2013, accompanying the Company’s Annual Report for the financial year ended 31 December 2012.

4. Resolution 10 INFORMATION ADDITIONAL

The proposed Resolution 10, if passed, will empower the Directors of the Company to exercise the power of the Company to purchase the Company’s shares up to ten percent (10%) of the total issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the retained profits and/or share premium account of the Company. This authority will, unless revoked or varied at a general meeting, expire at the conclusion of the next AGM of the Company. The details of the proposal are set out in the Share Buy-Back Statement dated 3 June 2013, accompanying the Company’s Annual Report for the financial year ended 31 December 2012. NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 196

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN THAT the first and final dividend of 7.6 sen per ordinary share of RM0.50 each comprising 0.4 sen per share, less Malaysian Income Tax of 25% and single-tier dividend of 7.2 sen per share, in respect of the financial year ended 31 December 2012, if approved at the Twenty-First Annual General Meeting, will be paid on 20 September 2013 to Depositors of ordinary shares registered in the Record of Depositors on 9 September 2013.

A Depositor shall qualify for entitlement to the dividend only in respect of: a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 9 September 2013 in respect of transfers; and b) Shares bought on the Bursa Malaysia Securities Berhad up to 5.00 p.m. on 4 September 2013 i.e. on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

YANG BAO LING (MAICSA 7041240) KUAN HUI FANG (MIA 16876) Company Secretaries

Kuala Lumpur 3 June 2013

MAH SING GROUP BERHAD ANNUAL REPORT 2012 Mahsing Group Berhad inner_Layout 1 5/28/13 11:59 AM Page 197 CORE FACTS

197

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING MESSAGES

Pursuant to paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, there is no person seeking election as Director of the Company at this Twenty-First Annual General Meeting. CIIISGOVERNANCE ACTIVITIES FINANCIALS INFORMATION ADDITIONAL NOTICES FORM OF PROXY

MAH SING GROUP BERHAD ANNUAL REPORT 2012 This page has been intentionally left blank FORM OF PROXY

(Before completing the form please refer to notes below) No. of ordinary shares held

I/We ...... Telephone No: ...... (FULL NAME IN CAPITAL LETTERS) I.C. or Company No...... CDS Account No: ...... (NEW I.C. NO. OR COMPANY NO.) of ...... (FULL ADDRESS) being a member/members of MAH SING GROUP BERHAD hereby appoint* the Chairman of the Meeting or failing him

…...... …...... I.C. No: ...... (FULL NAME IN CAPITAL LETTERS) of ...... …...... (FULL ADDRESS) or failing him, ………………..……....………………………...... I.C. No: ...... (FULL NAME IN CAPITAL LETTERS) of ...... (FULL ADDRESS) as my/our proxy, to vote for me/us on my/our behalf, at the Twenty-First Annual General Meeting of the Company (“AGM”), to be held at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur on Tuesday, 25 June 2013 at 10.00 a.m., or any adjournment thereof, on the following resolutions referred to in the notice of the AGM:

My/our proxy is to vote as indicated below:

NO RESOLUTIONS FOR AGAINST

1 Declaration of first and final dividend 2 Payment of Directors’ fees 3 Re-election of Tan Sri Dato’ Sri Leong Hoy Kum as Director 4 Re-election of Captain Izaham Bin Abd. Rani as Director 5 Re-appointment of Deloitte KassimChan as Auditors 6 Re-appointment of Jen. Tan Sri Yaacob Bin Mat Zain (R) as Director

7 Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965

8 Proposed renewal of Shareholders’ Mandate as specified in Sections 2.3.1 (a) and (b) of the Circular to Shareholders dated 3 June 2013

9 Proposed renewal of Shareholders’ Mandate as specified in Section 2.3.1 (c) of the Circular to Shareholders dated 3 June 2013 10 Proposed renewal of share buy-back authority

(Please indicate with an “X” in the space provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific direction, your proxy will vote or abstain as he/she thinks fit).

Dated this ...... day of ...... 2013 ...... Signature: Shareholder or Common Seal of Appointor * Delete the words “the Chairman of the Meeting or” if you wish to appoint some other person to be your proxy.

Notes: i. A member entitled to attend and vote at this meeting is entitled to appoint a proxy or attorney or in the case of a corporation, to appoint a duly authorised representative to attend and vote in his/her place. A proxy may but need not be a member of the Company and provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. ii. The power of attorney or a notarially certified copy thereof or the Form of Proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing. If the appointor is a corporation, it must be executed under its seal or under the hand of its officer or its attorney duly authorised on its behalf. iii. Where a member or the authorised nominee appoints more than one (1) proxy (subject always to a maximum of two (2) proxies of each meeting), or where an exempt authorised nominee appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. iv. The Form of Proxy together with the power of attorney (if any) under which it is signed or a duly notarially certified copy thereof must be deposited at the registered office of the Company at Penthouse Suite 1, Wisma Mah Sing, No. 163, Jalan Sungai Besi, 57100 Kuala Lumpur not less than forty-eight (48) hours before the time for holding this meeting or any adjournment thereof. v. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting) in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. vi. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. vii. Depositors whose name appear in the Record of Depositors as at 18 June 2013 shall be regarded as members of the Company entitled to attend the AGM or appoint proxies to attend and vote on his/her behalf. Fold this flap for sealing

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THE COMPANY SECRETARY MAH SING GROUP BERHAD Penthouse Suite 1 Wisma Mah Sing No. 163, Jalan Sungai Besi 57100 Kuala Lumpur

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